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Democrats and Republicans see the potential effects of Trump’s policies differently. Consumer sentiment among Republicans soared after Election Day, according to the University of Michigan’s consumer sentiment survey. For Democrats, it plummeted.
Sweeping tariffs could start a trade war if countries retaliated with tariffs of their own. Studies have shown that the cost of tariffs are often passed on to American consumers, leading to higher inflation.
The stock market rebounded last Friday from Wednesday's selloff after the Fed indicated that it would scale back interest rate cuts in 2025. Even so, all indices remained in the red for the week. The Dow Jones Industrial Average dropped 2.2%, the S&P 500 lost 2.0%, and the NASDAQ retreated 1.8%. Last week saw several mixed reports. ![]()
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The third and final revision to third quarter GDP was revised up to 3.1%, pointing to the enduring strength of the U.S. economy. ![]()
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November retail sales also came in better than expected, although almost all of the unexpected gains were concentrated in the auto sector. ![]()
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The final University of Michigan Index of Consumer Sentiment for December held steady at 74.0. In the same period a year ago, the index stood at 69.7. ![]()
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In disappointing news, industrial production decreased by 0.1% in November for the third month in a row. The capacity utilization rate also fell to 76.8%, its lowest level since April 2021. ![]()
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Both personal income and personal spending missed expectations for the month of November. And while core PCE, the Fed’s preferred measure of inflation, increased less than expected month over month, it remained stubbornly at 2.8% on an annual basis. ![]()
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Total housing starts declined 1.8%, but single unit starts were up 6.4%, led by a bounce back in the South. November building permits were higher than forecast. Existing home sales were up 6.1% from the same period a year ago, the largest year-over-year increase since June 2021. ![]()
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Initial jobless claims for the week ending December 14 down by 22,000 to 220,000. Continuing jobless claims for the week ending November 30 decreased by 5,000 to 1.874 million. ![]()
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The Conference Board’s leading indicators index increased in November for the first time in over two years. Stronger building permits and improvement in the inverted yield curve boosted this change. @Chmura Economics & Analytics
Treasury yields also spiked in September and early November, even after the Fed first started cutting rates and stocks were soaring after Trump’s victory. The average rate on a 30-year mortgage, which tends to trend in the same direction, also went up. This may seem paradoxical, given the Fed’s rate cuts.
The Fed’s recent moves, however, have made clear that inflation risks are back. On Dec. 18, the Fed announced its third rate cut of the year, a quarter-point reduction as expected. But Fed policymakers dialed down expectations for cuts next year, suggesting that it would make just two rate cuts by the end of 2025.
For the past couple of years, monetary tightening was the name of the game in nearly all major economies, as central bankers raised policy rates to tame surging inflation. This summer and fall, many advanced economies began to cut rates for the first time since the pandemic.
Thoughts on the Latest Economic News