Inflation is starting to cool, according to November’s Consumer Price Index (CPI). Shelter and home prices rose 0.4% in November. The Federal Reserve announced they will be holding interest rates steady. U.S. retail sales increased 0.3% month-over-month, topping Wall Street expectations. Yahoo Finance spoke to experts across the industry regarding the latest economic data and what it means for investors.
CPI (00:00:25):
eToro U.S. Investment Analyst Callie Cox discussed the CPI report as it related to inflation and her expectations for the U.S. economy in 2024. Cox said, “The economy is still resilient and inflation is still coming down at an impressive rate. So if you’re an investor looking ahead to 2024 … look at quality risk, look at those companies that can survive a recession. But don’t sit this market out, it’s a bull market until proven otherwise.”
National Economic Council Director Lael Brainard was encouraged by the inflation data in November’s CPI report. Brainard said, “The inflation data is very encouraging. Two-thirds decline in inflation, inflation down close to 3% now … So the overall picture I think is a good one.”
Housing data (00:01:21):
Kinloch Partners CEO Bruce McNeilage discussed the outlook for the housing market with regard to home builders and home purchases in 2024. McNeilage said, “Builders are doing great as far as supplying houses, but demand is so much higher than what these builders are able to offer to the general public.”
Fed decision (00:01:36):
Yardeni Research President Ed Yardeni believes the Fed decision signals that the economy is slowing as expected, while inflation continues on a moderating trajectory. Yardeni explained, “Most (economists) thought that we would need a recession in the U.S. in order for inflation to come down, but our friends in China and Europe did it for us. China has been exporting deflation in goods, so goods inflation is not an issue.”
Yahoo Finance Reporter Alexandra Canal broke down the latest dot plot and interest rate projections for 2024. Canal said, “The majority of FOMC members here expect interest rates 4.6%. Now considering where we are right now, that implies a 75 basis point cut. Since the Federal Reserve has been cutting rates by about a quarter of a percentage point at its meetings, this implies three rate cuts to come next year.”
Retail sales (00:02:43):
EY Chief Economist Greg Daco broke down the latest retail sales data and the state of the consumer. Daco explained, “We’ve absolutely seen cost fatigue. That’s the big disconnect between how the economy is doing and how people are feeling. Consumer sentiment, business sentiment is quite depressed in this environment, and yet the economy is still moving at a decent pace. It is slowing, but it is still moving forward.”
Bank of America Institute Senior Economist David Tinsley discussed the labor market as it relates to consumer retail numbers. Tinsley said, “People hate inflation, of course they hate inflation, but if they’re getting a pay raise, then they can afford to cover those price increases. So it’s the labor market story that’s part of the consumer by-and-large this year.”
Video highlights:
00:00:03 – Yahoo Finance’s Josh Schafer
00:00:25 – eToro U.S. Investment Analyst Callie Cox
00:01:21 – Kinloch Partners CEO Bruce McNeilage
00:01:00 – National Economic Council Director Lael Brainard
00:01:36 – Yardeni Research President Ed Yardeni
00:02:00 – Yahoo Finance Reporter Alexandra Canal
00:02:43 – EY Chief Economist Greg Daco
00:03:09 – Bank of America Institute Senior Economist David Tinsley
