Stubborn and sticky inflation did not prevent the American consumer from tapping rising real incomes in November as the economy approached the traditional holiday season. Personal income increased by 0.3%, personal spending by 0.4% and real spending by 0.3% as households used the 1.1% increase in ... READ MORE >
Economics
Morning market minute: The strange logic of economic populism and government shutdowns
The prospect of a government shutdown and another unnecessary standoff in Congress over raising the nation's debt ceiling are providing a lump of coal in Americans’ holiday stockings. At issue are a $110 billion disaster relief bill, an extension of the farm bill and a two-year proposed suspension ... READ MORE >
The Fed is right: Strong GDP data points to fewer rate cuts
The latest estimate of gross domestic product in the third quarter came out stronger than expected, rising by 3.1% instead of 2.8%, according to government data released on Thursday. Upward revisions to personal consumption, trade and government spending drove the gains. The labor market also showed ... READ MORE >
Global economic outlook for 2025: Modest growth amid trade tensions
Global growth in 2025 will expand at a modest 2.5% pace as the sluggish recovery from the pandemic continues, according to our forecast. This forecast accounts for an expectation of higher import taxes in the U.S. market, particularly for goods that flow through Chinese supply chains. Developed ... READ MORE >
Fed cuts rates as it signals a prudent pause to assess policy uncertainty
The Federal Reserve reduced its policy rate by 25 basis points to a range between 4.25% and 4.5% at its meeting on Wednesday while communicating to policymakers and the public that its reductions will be on pause until it gets a better sense of the policy changes to come. We are updating our ... READ MORE >
Housing starts fall below estimates as permits rebound
Housing starts dropped unexpectedly again in November to 1.289 million on an annualized basis, continuing the downtrend that began in 2022. The increase in starts from rebuilding in the South after the hurricanes was not enough to offset declines in the Midwest and the West. But the downside ... READ MORE >
Morning market minute: What the Treasury yield curve is saying about the economy
Three months ago, in the week before the Federal Reserve’s first rate cut in the current cycle, the bond market was pricing in a two-year yield of 3.58%. The two-year yield has since risen to 4.23%, an increase of 65 basis points at a time when the Fed is cutting interest rates. Two-year yields are ... READ MORE >
Rising demand helps U.S. retail sales top forecasts
Retail sales topped forecasts in November, growing at a robust pace for the third month in a row. Sales at retail and online stores increased by 0.7%, according to the Census Bureau on Tuesday. Car sales were behind the increase, yet sales also looked strong in other key components. The control ... READ MORE >
Inflation risk premium suggests higher yields ahead
As the yield on the 10-year Treasury advances toward 4.5%—which is our baseline forecast for next year—the inflation risk premium is supporting that move. The inflation risk premium is the compensation that investors demand for the possibility that inflation may rise, or fall, and that premium is ... READ MORE >
Resignation of Canada’s finance minister before release of fall economic statement adds to uncertainty
(Editor's note: This post has been updated with the latest from the federal government's fall economic statement) Chrystia Freeland’s resignation as Canada’s finance minister highlights increasing uncertainty in the country's political environment as financial challenges loom in 2025. Reaction was ... READ MORE >