This year, supply chain snags have eased and shoppers aren’t as worried about availability as they are about higher prices on everything from rent to food, causing them to postpone their buying until the last minute.
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.
An AARP report released last month showed more than a third of people 65 and older described their financial situation at midyear as worse than it was 12 months before.
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.
Consistent with a sharp slowdown, Fed officials projected that the economy will barely grow next year, expanding just 0.5%, less than half the forecast it had made in September.
The six rate hikes the Fed has already imposed this year have raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years.
The report, the last of 2022, points to inflation that—while much too high—is beginning to ease.
In a recent speech, Federal Reserve Chair Jerome Powell pointed to the shortfall of workers and the resulting rise in average pay as the primary remaining driver of the price spikes that continue to grip the economy.
The latest year-over-year figure was down from 8% in October and from a recent peak of 11.7% in March.
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.
The Federal Reserve will push rates higher than previously expected and keep them there for an extended period, Chair Jerome Powell said Wednesday, in remarks likely intended to underscore the Fed’s single-minded focus on combating stubborn inflation.
The Federal Reserve is closely monitoring the figures on job openings and quits for signals about the strength of the job market.
Chair Jerome H. Powell is expected to this week cement expectations that the Federal Reserve will slow its pace of interest-rate increases next month, while reminding Americans that its fight against inflation will run into 2023.
Under the Inflation Reduction Act, signed into law by President Biden on Aug. 16, some consumers may qualify for more than $10,000 in rebates and tax credits for buying high-efficiency appliances and electric vehicles and other purchases to decrease their carbon footprints.
Corporate profits have withstood raging inflation over much of the last year, but those good times might be ending.
Comments by James Bullard raised the prospect that the Federal Reserve’s interest rate hikes will make borrowing by consumers and businesses even costlier and further heighten the risk of recession.
Americans are bracing for a costlier Thanksgiving this year, with double-digit percent increases in the price of turkey, potatoes, stuffing, canned pumpkin and other staples.
Economists largely stuck to their forecasts that the Federal Reserve will raise interest rates to 5% by March and hold them there for most of 2023, even after inflation slowed last month by more than forecast.
The annual figure is down from 8.4% in September. On a monthly basis, the government said Tuesday that its producer price index, which measures costs before they reach consumers, rose 0.2% in October from September.
Speaking at an IBJ economic forecast event Monday, a Fifth Third Bank economist said the chance of heading into another recession is “literally a toss-up, a coin flip.”
