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Headline News For 16 December, 2024
This is an overview of the most recent national economic events as of December 16, 2024:
Economy and Inflation
The American economy continues to grow exponentially despite inflation, which is at its highest level since the 1970s, at around 2.8%, crossing the Federal Reserve’s target of around 2%.
Federal Reserve and Interest Rates
The Federal Reserve is expected to respond to the alarm that inflation has allegedly stayed too high, securing a default interest rate cut further to increase the rate to around 4.25-4.5%. In the upcoming years, policymakers are afraid to slow down rate cuts in 2025 to balance out the inflation risks.
Housing Market and Mortgage Rates
While the new forecast of around 6.3% in 2025 still maxes out at the affordable limits due to the ongoing sluggish housing market performance, home prices are projected to increase by 5% this year. Furthermore, the endless mortgage and home prices likely convince homeowners to spend extra income on renovations rather than buying new homes.
**The Stock Market and Treasuries: An Analysis**
U.S. stocks during President Trump’s tenure have risen by around 27%, and this increase can be witnessed along with the significant gains that the U.S. stock market experienced as the receiver of Donald Trump’s economic policies. As far as the bond market goes, it currently has signs of being under stress as the 10-year treasury note increase is above 4.4%. A reason for the increase could be out of concern regarding the rise in inflation promise and an increase in government spending.
Despite the above-mentioned inflationary concerns, the foreign interest in U.S. debt remains upward.
**Business Outlook: An Overview**
Those conducting business face the dual challenge of inflation, which only goes away with a careful approach to policymaking. The slow pace of rate cuts that the Federal Policy is expected to deploy means that interest rates on loans for both businesses and consumers are likely to remain high, which can impact plans for expansion and investment.
Considering everything, while the U.S. economy showcases signs of strength, inflation, housing affordability, and the prevailing market volatility remain concerning aspects to manage, which fall under the purview of policymakers and investors.
This is a brief review of recent national initiatives in different sectors of the economy as of December 16, 2024.
Economy & Inflation Rates
The United States economy is strong. Real GDP growth of 2.7% is expected for 2024, with added consumer expenditures and productivity growth.
Inflation is a problem regardless. It remains at a high annual rate of 2.8%, two percent over what the Federal Reserve stipulates as a limitation.
Federal Reserve and Interest Rates
The Federal Reserve will likely reduce interest rates by quarter points again this week, the third reduction in the current year. The federal fund’s target range is expected to be between 4.25 and 4.5 percent now. As the rate of increases has tapered off, a closer balance of inflation and labor capacity would result in rate cuts in 2025.
Stock Exchange Along With Treasuries
The economy will likely benefit from economic policies under Donald Trump’s second term, which translates into significant gains in stock markets. U.S. equities have risen by a whopping twenty-seven percent this year.
The bond markets, however, appear to be in distress as inflation appears to be a concern along with the rush for government debts for increased spending, as indicated by the increase in the yield for a 10-year treasury note to over 4.4%
As of December 16, 2024, here is a comprehensive overview of the latest national developments across various sectors:
Economy and Inflation
The U.S. economy is exhibiting robust growth, with real GDP expected to increase by 2.7% in 2024, driven by consumer spending and productivity gains.
However, inflation remains a concern, holding steady at an annual rate of 2.8%, above the Federal Reserve’s target of 2%.
Federal Reserve and Interest Rates
The Federal Reserve is expected to implement a quarter-point interest rate cut this week, marking the third consecutive reduction this year. This adjustment would increase the federal funds rate target to 4.25-4.5%. Policymakers are adopting a more cautious approach, indicating that the rate cuts may slow in 2025 to balance inflation risks and labor market strength.
Stock Market and Treasuries
The stock market has experienced significant gains, with U.S. stocks rising by 27% this year, partly attributed to economic policies under President-elect Donald Trump’s second term.
However, the bond market is showing signs of strain, with the yield on the 10-year Treasury note surpassing 4.4%. This increase reflects investor concerns about potential inflation and the growing supply of government debt to fund spending.
Housing and Mortgage Rates
The housing market is improving, as are mortgage rates and inventory, but the forecasts say otherwise. Due to a drop in mortgage rates, which are expected to touch 6.3% in 2025, home prices are expected to increase by 5 percent.
In addition, the reduction in purchasing new homes will increase home improvement spending.
Unemployment and Labor Market
The labor market remains stable as unemployment remains low and wage levels rise above inflation. The exception to this is contraction in certain industries, such as manufacturing. December saw a continuing decline in U.S. manufacturing as factory output hit 4.5-year lows.
Business Outlook
The businesses are working with a more elaborate dynamic while dealing with inflation and stagnant monetary policy.
Given that the Federal Reserve will not be slashing rates aggressively, the cost of loans to consumers and corporations could be maintained at a high level, affecting their willingness to invest or expand.
Political Developments
President-elect Donald Trump has commenced assembling his administration by making numerous important appointments. Susie Wiles has been selected as White House Chief of Staff, which is remarkable since this is the first time a woman will ever hold this position.
Also, Trump has picked candidates for various cabinet posts as he outlines the policies he wishes to pursue in the next term.
Global Political Climate
The political developments that one has recently witnessed globally present evidence of an exceptionally turbulent and transformational period. By defeating Kamala Harris, Donald Trump’s election as the President of the United States marked the end of an era of benevolent scientific rule. Other examples are the surcease of the German government’s existence over budget disagreements and the South Korean military’s declaration of martial law against a president’s wish only to have Congress reverse the situation.
To summarize, the U.S. economy may appear stable, albeit the processes of inflation, stagnancy in the housing markets, and volatility in the other markets need to be addressed. Policymakers and investors are extensively monitoring all these issues and the peculiar economic situation.
https://www.youtube.com/watch?v=2KSvn46epzU
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This discussion was modified 1 day, 10 hours ago by
Gustan Cho.
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This discussion was modified 1 day, 10 hours ago by
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