10 Things You Need to Know: December 17, 2024
Key data releases this week include: retail sales (Tue), NAHB Housing Market Index (Tue), industrial production (Tue), housing starts (Wed), FOMC rate decision (Wed), Q3 GDP revision (Thu), leading economic indicators (Thu), existing home sales (Thu), personal income and spending (Fri), and PCE Deflator (Fri).
Bloomberg
December 10, 2024
The NFIB Small Business Optimism Index rose to 101.7 in November, the seventh m/m rise in eight months. This was the first time in 35 months that the index was above the 50-year average of 98. Economists had expected a reading of 95.3.
Haver
December 10, 2024
U.S. nonfarm business productivity (output per hour) increased an unrevised 2.2% (SAAR) during Q3’24 after a 2.1% rise in Q2 and a 0.7% Q1 gain. The figure matched expectations in the Action Economics Survey. The 2.0% y/y increase remained below its 2.7% gain in 2023 (Q4/Q4) but was improved from a 1.4% decline in 2022.
Capital Economics
December 13, 2024
We remain convinced that the ECB will cut interest rates significantly next year, and further than investors anticipate. Meanwhile, France has a new prime minister, but the country’s fiscal problems look as big as ever. And reports this week suggest that pressure on public finances across Europe could lead to joint borrowing to fund extra defense spending.
Financial Times, Reuters
December 13, 2024
Chinese bond yields hit record lows and stocks fell after the Central Economic Work Conference, where President Xi Jinping and other leaders pledged to lower interest rates and boost domestic consumption. The government plans to increase the fiscal deficit and issue more special bonds, but specific measures were not detailed, leading to market disappointment.
CNBC, Nikkei Asian Review
December 16, 2024
The Bank of Japan is expected to keep its benchmark interest rate at 0.25% this week, according to a survey of economists, as it monitors domestic wage trends and potential policy changes under US President-elect Donald Trump. While some economists believe Japan’s economy is on track to meet the central bank’s 2% inflation target, the BOJ might wait to assess wage-driven inflation and US policy impact.
Barron’s
December 16, 2024
“Unless a December cut is accompanied by a very hawkish press conference by Powell, which he has not delivered since becoming a dove at August’s Jackson Hole speech, it could send the stock market melting up even higher,” writes Edward Yardeni, president of Yardeni Research, who has a 7000 target on the S&P 500. “That would increase the likelihood of a stock market correction early next year and risk overheating the economy.”
Barron’s
December 16, 2024
Trump has threatened a 60% tariff on imports from China and 25% on goods from Mexico and Canada, and a 10% across-the-board duty on imports from all other countries. If enacted, these would push the U.S.’s effective tariff rate up roughly sevenfold to 21%. Goldman Sachs economists calculate that tariffs around that level could lift core PCE inflation to 3.1% by early 2026, versus their pre-election forecast of 2% core inflation by then.
The Wall Street Journal
December 16, 2024
The Federal Reserve is expected to implement another interest-rate cut this week, marking the third consecutive reduction. While some officials express concern about the potential for cutting rates too much and risking inflation, others believe there is still room for maneuvering.
Oxford Economics
December 11, 2024
The Fed will look through this [latest inflation report], but risks are still weighted toward the central bank pausing longer than we anticipate, particularly if the Trump administration implements tariffs sooner than we think and or it follows through with large-scale deportations. We remain comfortable with our forecast for the Federal Reserve to cut interest rates in December and then pause in January. The Fed knows that inflation will get bumpier early next year.