Economic News – 12/01/22

The economic data continues to roll in, so let’s see what today brought with it. 📝

First is the Fed’s key inflation measure, the core personal consumption expenditures index (PCE). After rising from July through September, the measure fell 0.2% in October to 5% YoY. The volatility in the data makes it hard to identify a clear trend. As Jerome Powell said yesterday, there is still much work to do on the inflation front. 🥵

Additionally, personal income rose 0.7% in October, above estimates for a 0.4% increase. While personal spending rose 0.8%, as expected.

Weekly jobless claims gave back most of last’s week’s jump, falling from 16,000 to 225,000. 📉

Speaking of the Fed, economist Austan Goolsbee was named the next Chicago Fed President. He will take the place of Charles Evans, who is retiring early next year.

Today’s purchasing managers index (PMI) data showed that U.S. manufacturing contracted in October for the first time since June 2020. 🏭

Meanwhile, the U.S. government fights to avoid any additional self-inflicted wounds. The Senate passed the bill to avert a national railroad strike but voted down the House’s addition of seven paid sick days for workers. This will send it to the President’s desk for signing ahead of Friday’s deadline.

The Supreme Court says it will continue blocking Biden’s student loan forgiveness program. It has scheduled arguments for February and will conclude by the June deadline when payments and interest are set to resume. ⚖️

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Jobs Data Dampers Q1 Rate Cut Odds

While the leading indicators of employment continue to point to a slowdown, coincident indicators like U.S. nonfarm payrolls and ADP employment data continue to surprise to the upside. For stock market bulls, that may be bad news as it takes hopes of a first-quarter rate cut off the table. 😞

As we’ve discussed, much of the market’s recent rally has come on the back of hopes that the Federal Reserve will cut rates as much as six times in 2024. Disinflation continues across most major metrics, but a tight labor market has kept consumers spending and the economy humming along. As a result, Jerome Powell and the Fed have been hesitant to loosen financial conditions too quickly.

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Gas Rules Everything Around Me (G.R.E.A.M)

It was another closely watched day of economic data, with investors focused on employment and consumer sentiment. 👀 

Unlike the JOLTs data and ADP employment report that signaled a continued slowdown in the labor market, today’s nonfarm payrolls bucked the trend again. The economy added 199,000 jobs in November, beating estimates of 190,000 and October’s 150,000 figure.

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Strikes Expand To Vegas Workers

The battle between workers and employers continues, particularly in the service industry. Here’s some updated news on how it’s all shaking out. 👀

First, the United Auto Workers union said it will expand strikes at General Motors, Ford, and Stellantis plants if no significant progress is made by 10:00 a.m. ET Friday. The strikes currently involve about 12.5% of the UAW’s 146,000 members whose labor contracts expired two weeks ago. ❌

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Economic Updates & The Fed

It was a busy day on the economic front, so let’s recap what you missed. 👇

First, we’ll start with the Federal Reserve’s interest rate decision. The central bank left rates unchanged after pausing at its September meeting, largely as expected.

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