🎄🛍️ US Retail Sales Show Happy Holiday Season
Happy Sunday,
This week, we’re unpacking key market shifts as inflation shows signs of easing, industrial production gains momentum, and retail sales close out 2024 on a high note. With major economic data on the horizon, here’s what you need to know to stay ahead:
Cooling CPI sparks speculation about earlier rate cuts.
Industrial output rebounds, driven by manufacturing stabilization.
Holiday retail sales beat expectations, boosting growth outlook.
Let’s dive into the numbers shaping the markets.
- Humphrey & Rickie
Market Report
US Core CPI Finally Eases, Rallying Bets for Fed to Cut Sooner
US consumer prices in December rose less than expected, leading to a larger selloff in bond markets and more bets that the Fed will cut rates sooner than expected.
Cheaper hotel nights, a smaller price increase in medical services, and relatively tame rent increases helped keep December inflation moderate.
Core CPI, which excludes food and energy costs, increased 0.2% after rising 0.3% for four straight months. Overall CPI rose 0.4% from the prior month, with over 40% of the increase due to energy costs.
While data on retail sales, inflation expectations, and the housing market will be released over the next two weeks, this inflation report was one of the last major economic data points Fed officials will have before their Jan. 28-29 meeting.
US Industrial Output Beats Estimates as Manufacturing Stabilizes
US industrial production saw a significant increase in December 2024, rising by 0.9%, which was the largest gain since February and exceeded all forecasts.
Growth was primarily driven by a 0.6% increase in manufacturing output, the most substantial rise since August, partly due to the resolution of a strike at Boeing.
The robust industrial production data, combined with positive retail sales and housing starts figures, prompted economists to revise their GDP growth estimates upward for the fourth quarter of 2024.
The manufacturing sector, which had struggled in the previous two years, showed signs of stabilization with increased production across various industries, especially aerospace equipment production, metals, and non-durable goods such as apparel, petroleum, and chemicals.
US Retail Sales Broadly Advance, Capping a Solid Holiday Season
Some more good economic news! US retail sales ended 2024 on a positive note, increasing by 0.4% in December following an upwardly revised 0.8% gain in November.
The control group sales, which are used to calculate GDP, rose by 0.7%, exceeding expectations and suggesting strong economic growth in the fourth quarter.
The data showed broad-based gains across most retail categories, with notable increases in sales of sporting goods, furniture, and clothing. Auto sales also continued to rise, benefiting from lower vehicle prices, increased inventory, and lower interest rates.
Overall holiday sales for 2024 were up 4% compared to the previous year, surpassing initial estimates.
Forecast Ahead
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