10 Things You Need to Know: January 8, 2025
Key data releases this week include: factory orders (Mon), JOLTS Jobs Openings (Tue), ISM Services (Tue), FOMC meeting minutes (Wed), consumer credit (Wed), consumer sentiment (Fri), and nonfarm payrolls (Fri).
Haver
December 31, 2024
U.S. house prices rose 0.4% m/m in October after an increase of 0.7% in September, according to the Federal Housing Finance Agency (FHFA) House Price Index. The October reading was the fifth straight m/m gain. The year-on-year rate of increase held at 4.5% for the third successive month, well below a high of 18.8% in February 2022.
Haver
January 3, 2025
The ISM Purchasing Managers Index of activity in the manufacturing sector rose to 49.3 during December from 48.4 in November. A level of 48.2 had been expected by the Action Economics Forecast Survey.
Capital Economics
January 6, 2025
Data for Germany and Spain suggest euro-zone inflation was higher than expected in December. However, we still think that inflation is likely to undershoot the ECB’s forecasts later this year causing the Bank to cut rates by more than investors expect. Economic growth remains weak in the euro-zone.
Capital Economics
December 31, 2024
The PMIs suggest that China’s economy gained momentum in December, with faster growth in services and construction more than making up for slower growth in the manufacturing sector. Increased fiscal support should continue to lift economic growth in the near-term given that deficit spending is likely to be front-loaded at the start of 2025.
Bloomberg
January 6, 2024
Oxford Economics predicts that emerging-market middle classes will double in the next decade — expanding from 354 million households in 2024 to 687 million by 2034. By 2029, two in every three middle-class consumers are expected to be from Asia. The biggest increases will come from China, India, Indonesia, the Philippines and Vietnam.
Barron’s
January 1, 2025
In the auto industry, some 50% to 70% of parts for popular cars assembled in the U.S. come from Canada or are made domestically, with the rest imported from Mexico and elsewhere. The overall impact of tariffs could be $3,000 per imported car, or about 6% of the average new-car price.
Barron’s
January 1, 2025
Stable coins can potentially amplify dollar cycles, which can have really terrible consequences. Almost by design, this kind of thing will happen exactly in those countries that are weaker; that are more exposed to dollar strength. If you create a vehicle for people in those countries to pile into dollars and weaken the domestic banking system, you’re just expanding the reach of that U.S.-centric global financial cycle.
Barron’s
January 1, 2025
A more nationalist America puts at risk the large foreign-capital inflows required to fund America’s perennial federal savings gap. For decades, the U.S. savings deficit has been offset by importing the world’s excess capital surplus. Foreign ownership of U.S. securities totaled a whopping $30.1 trillion in the third quarter of 2024. Should these inflows diminish, America’s isolation will come with some pain and sacrifice.
Reuters
January 5, 2025
Federal Reserve Governor Adriana Kugler and San Francisco Fed President Mary Daly have emphasized the need to continue addressing inflation while avoiding harm to the labor market. “We are fully aware that we are not there yet — no one is popping champagne anywhere,” Kugler said. Meanwhile, Federal Reserve Governor Lisa Cook said, “Over time, I still think it will likely be appropriate to move the policy rate toward a more neutral stance.”