The softer readings add to growing signs that the worst inflation bout in four decades is gradually waning. Still, the Fed doesn’t expect inflation to slow enough to get close to its 2% target until well into 2024.
The U.S. inflation report for December being released Thursday morning could provide another welcome sign that the worst bout of spiking prices in four decades is slowly weakening.
An economic downturn is still possible. Yet in recent weeks, with inflation showing widespread signs of easing, a more cheerful view has gained traction: Maybe a recession isn’t inevitable after all.
America’s employers added a solid 223,000 jobs in December, but average hourly pay growth eased in December to its slowest pace in 16 months.
Private payrolls increased 235,000 last month, led by small- and medium-sized businesses, according to data from ADP Research Institute in collaboration with Stanford Digital Economy Lab. The figure exceeded all but one forecast in a Bloomberg survey of economists.
The high number of vacancies suggest the Fed will continue raising its benchmark interest rate at its coming meetings to quell inflation. Those higher rates will also raise the cost of mortgages, auto loans and other consumer and business borrowing.
International Monetary Fund Managing Director Kristalina Georgieva said one third of the world is expected to be in recession in 2023.
Friday’s report from the Commerce Department showed that prices rose 5.5% in November from a year earlier, down from a revised 6.1% increase in October and the smallest gain since October 2021.
The rise in gross domestic product—the economy’s output in goods and services—marked a return to growth after consecutive drops in the January-March and April-June periods.
Megadeals announced early in the year were soon replaced by jitters about getting mergers and acquisitions over the finish line, with monthly deal activity plummeting by almost half from May to June. The volumes have yet to recover.
This month’s number reflected a sharp rebound, pushing the consumer confidence index to its highest level since April.
After squirreling away cash at record rates during the pandemic, Americans have taken a hard turn in the opposite direction, with the personal savings rate dropping to a 17-year low of 2.3% in October.
Americans cut back on retail spending last month as the holiday shopping season began, with high prices and rising interest rates forcing families to make harder decisions about what they buy.
The report, the last of 2022, points to inflation that—while much too high—is beginning to ease.
The latest year-over-year figure was down from 8% in October and from a recent peak of 11.7% in March.
The U.S. labor market showed little sign of slowing last month, maintaining a surprisingly robust pace despite a slowdown in the tech industry.
The report also showed that consumers spent more in October, even after adjusting for inflation, a sign of their continued willingness to keep spending in the face of high prices.
Wednesday’s government report showed that the restoration of growth in the July-September period was led by solid gains in exports and consumer spending that was stronger than originally reported.
The Federal Reserve is closely monitoring the figures on job openings and quits for signals about the strength of the job market.
A rising number of households are stepping up their use of credit cards—or “buy now, pay later” plans—to keep up with higher prices.
