And what a whirlwind it has been. Recession forecasts unwound as consumer spending consistently surprised to the upside and propelled real GDP growth to above-trend paces. The strength in demand has hindered progress on disinflation, exemplified by the PCE deflator inching up a tenth to 2.4% year-over-year in November. While overall inflation remains above the Federal Reserve's 2% target, the FOMC has begun to dial back policy restriction to lend a helping hand to the decelerating labor market. The outlook for 2025 is riddled with uncertainty, yet the data released this week demonstrate a U.S. economy that retains momentum.
The third estimate of real GDP showed output expanding at a 3.1% annualized rate in Q3, up from an initially reported 2.8%. The upward revision stemmed from stronger growth in consumer spending and exports. Real final sales to private domestic purchasers (i.e., the sum of real personal consumption and business investment; a solid gauge for underlying demand) ticked up to 3.1% year-over-year, running ahead of its 2.9% average annual growth over the 2010-2019 economic expansion (chart). In short, final demand is solid.
Initial data for Q4 illustrate continued resilience. Retail sales rose 0.7% in November, beating expectations for the sixth consecutive month. Our measure of holiday sales—retail sales in November and December excluding auto dealers, gas stations and restaurants—is up 3.5% year-to-date, which is roughly in line with our forecast for a 3.3% annual gain. Separate data show total personal spending, which includes retail goods and services, was 5.5% higher on a year-over-year basis in November, up from 4.5% at the beginning of this year.
This Week's State Of The Economy - What Is Ahead? - 13 September 2024
Wells Fargo Economics & Financial Report / Sep 17, 2024
The core Consumer Price Index (CPI) printed at 0.3% month-over-month in August. This was slightly higher than consensus forecasts and marked the fastest price increase in four months.
This Week's State Of The Economy - What Is Ahead? - 20 September 2024
Wells Fargo Economics & Financial Report / Sep 24, 2024
The economic calendar was packed this week, but one event took center stage. At the conclusion of its September 17-18 meeting, the FOMC announced a 50 bps reduction in the federal funds rate to a target range of 4.75%-5.00% (chart).
This Week's State Of The Economy - What Is Ahead? - 25 October 2024
Wells Fargo Economics & Financial Report / Oct 31, 2024
The housing sector was in focus this week. During September, existing homes sales remained in a slump and declined to a fresh cycle low, while new home sales bucked the trend and rose solidly.
This Week's State Of The Economy - What Is Ahead? - 02 December 2022
Wells Fargo Economics & Financial Report / Dec 08, 2022
Total payrolls rose by 263K in November, with the unemployment rate holding steady at 3.7% and average hourly earning rising by 0.6%.
This Week's State Of The Economy - What Is Ahead? - 04 September 2020
Wells Fargo Economics & Financial Report / Aug 29, 2020
Employers added jobs for the fourth consecutive month in August, bringing the total number of jobs recovered from the virus-related low to 10.5 million.
This Week's State Of The Economy - What Is Ahead? - 28 April 2023
Wells Fargo Economics & Financial Report / May 03, 2023
U.S. Economy expands but at a weak rate. Regional bank failures cause corporate investment spreads to widen again. House Republicans pass bills that affect the debt ceiling.
This Week's State Of The Economy - What Is Ahead? - 22 July 2022
Wells Fargo Economics & Financial Report / Jul 27, 2022
July\'s NAHB Housing Market Index dropped 12 points to 55, the second largest monthly decline on record behind April 2020\'s pandemic-induced collapse.
This Week's State Of The Economy - What Is Ahead? - 18 August 2023
Wells Fargo Economics & Financial Report / Aug 23, 2023
The FOMC meeting minutes acknowledged the economy\'s resilience and continued to stress the Committee\'s resolve to bring inflation back down toward its 2% goal.
This Week's State Of The Economy - What Is Ahead? - 13 December 2024
Wells Fargo Economics & Financial Report / Dec 16, 2024
Prices were in focus this week with reports delivering the last key data before the FOMC\'s next meeting on December 17-18. The November readings on consumer and producer prices suggested that overall inflation remains stubbornly high.
This Week's State Of The Economy - What Is Ahead? - 25 November 2020
Wells Fargo Economics & Financial Report / Nov 28, 2020
It may be a holiday-shortened week, but there have been as many developments and economic indicators packed into three days as we can recall seeing in any other week this year.