Catenaa, Thursday, November 28, 2024-The U.S. economy demonstrated resilience in October, with consumer spending climbing 0.4%, exceeding expectations.
However, inflation remains stubbornly high, with core personal consumption expenditures (PCE) rising 0.3% in October and an annual increase of 2.8%.
This persists above the Federal Reserve’s 2% target, suggesting that the central bank’s efforts to curb inflation may be stalling.
Despite this, the Fed is expected to continue its rate-cutting cycle with a third reduction in December, though officials remain divided on further action.
Meanwhile, the labor market showed signs of stability, with jobless claims falling by 2,000 to 213,000 in the week ending November 23, a sign of continued strength in employment.
However, business investment softened as core capital goods orders declined 0.2%, indicating a slowdown in corporate spending.
Economists forecast that the growth in business investment will be slower in the coming months, further complicating the economic outlook.
Additionally, proposed tariffs from President-elect Trump could add to inflationary pressures in 2025, with economists warning of potential disruptions to trade. The combination of persistent inflation, slower business spending, and the possibility of higher tariffs raises concerns about the economic trajectory heading into 2025.
