US CPI Drives Policy Rate Cut Expectations Higher
The Consumer Price Index (CPI) for November 2024 rose by 0.3% month-over-month and 2.7% for the twelve months ended in November. Core CPI, which excludes volatile food and energy prices, increased by 0.2% MoM and 3.3% for the same 12-month period.
The U.S. Economy Added 227,000 Jobs
The November 2024 Jobs Report showed that the U.S. economy added 227,000 nonfarm payroll jobs, surpassing market expectations of 200,000 (Trading Economics).
Fed Governor Waller Inclined to Lower the Fed Funds Rate at the Next FOMC Meeting
During a speech this week, Fed Governor Christopher Waller expressed his belief that monetary policy remains restrictive and that rate cuts should continue over the next year.
President-Elect Trump Begins His Tariff Agenda
On Monday, President-Elect Trump stated on Truth Social that on January 20th, he will begin the necessary process to impose 25% tariffs on all Mexican and Canadian imports into the US. Furthermore, he would implement an additional 10% tariff on China.
PCE Inflation Remains Stubborn as Housing Continues to Drive the Figure Higher
PCE inflation increased by 0.2% MoM in October, a 2.3% YoY rate higher than the 2.1% reported in September. Furthermore, the core PCE index, which excludes food and energy, rose 0.3% MoM and 2.8% YoY, having increased 2.7% in August and September.
October CPI Met Market Expectations
The Consumer Price Index (CPI) for October 2024 modestly increased 0.2% MoM (+2.6% YoY), and the rate has remained unchanged since July. Core CPI, which excludes food and energy, rose 0.3% MoM (+3.3% YoY).
Uninformative Jobs Report
The US economy added only 12,000 jobs in October vs. the 100,000 estimate and the 194,000 12-month trailing average. This discrepancy largely illustrates the effects of hurricanes Helene and Milton and the ongoing strike at Boeing. Although the Bureau of Labor Statistics (BLS) cannot estimate the impact of the hurricanes on this month's figures due to data limitations and survey disruptions, it does calculate a 44,000 job impact from labor strikes.
Year-Over-Year Core PCE Remains Steady
The latest September Personal Consumption Expenditures (PCE) inflation data revealed a stable yet nuanced inflation landscape. The PCE price index increased 0.2% month-over-month and 2.1% year-over-year, reflecting ongoing moderation in price growth. Meanwhile, the core PCE price index, which excludes volatile food and energy prices, rose by 0.3% MoM and remained steady for a third consecutive month at a 2.7% YoY increase, signaling persistent inflationary pressures in core goods and services. The core PCE, the Federal Reserve's preferred inflation measure, is closely monitored to guide monetary policy.
US Real GDP Growth Slows Slightly in the 3Q24; Indicates Resilience
The U.S. economy grew 2.8% YoY in the 3Q24. The growth proved slightly below the 3.0% consensus forecast (according to Trading Economics) and the 3.0% rate from the 2Q24. The reading from the Bureau of Economic Analysis (BEA) reflects higher consumer spending, exports, and government spending.