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Economic Commentary

Economic Commentary – December 9, 2024

December 9, 2024
With few immediate concerns about the pace of economic growth —last week’s robust nonfarm payroll growth of 227,000 and an upbeat report from the National Retail Federation quite effectively set aside the slowdown worries — the focus now returns to financial markets and geopolitical turmoil. Expectations for the consumer price index and producer price index are benign, anticipating very little change in the 2.4-2.6% inflation storyline. However, there is some fear that the persistence of the CPI numbers in posting monthly increases of 0.3% instead of moving to 0.2% or 0.1% will chill the Federal Reserve’s interest (pun intended) in pushing rates down across the following year. The Federal Reserve has clearly signaled its belief that monetary policy is still restrictive when it has little need to be so and that it would continue to search for the elusive, lower, “neutral rate” of interest. Therefore, the real impact of the inflation numbers this week and in forthcoming months may be less on short-term rates and more on the longer end of the yield curve, especially given that those longer-end traders are precisely the ones fixated on the possible inflationary economic policy decisions of the incoming Trump administration.
Data to Watch:
  1. National Federation of Independent Business (NFIB) Optimism Index for November, released Tuesday, December 10
  2. Consumer Price Index for November, released Wednesday, December 11
  3. Producer Price Index for November, released Thursday, December 12
Suggested Reading:
  1. Construction Industry Braces for One-Two Punch: Tariffs and Deportations
  2. Payments are going digital, but many seniors still rely on cash
  3. OECD Economic Outlook, Volume 2024 Issue 2

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