Weekly newsletter December 12 to December 16
December 12, 2022
December 13, 2022
Recession Fears Ease For U.S. Economy As Gas Prices Fall With gas prices falling and the Dow Jones rallying, Americans have turned slightly bullish about the outlook for their personal finances, the new IBD/TIPP Poll finds. The share of Americans who think the U.S. economy is in a recession eased to 55% from 58% last month and 61% in October.
Photo: Giorgio Viera/AFP via Getty Images Photo/File Photo
Florida Lawmakers Hope to Aid Ailing Home Insurance Market Florida lawmakers on Monday advanced sweeping GOP legislation intended to shore up the state’s struggling home insurance market in the year’s second special session devoted to the topic. The proposal would create a $1 billion reinsurance fund, reduce litigation costs and compel some customers to leave the state-created insurer of last resort and rejoin the private market. It also would force insurers to respond to claims more promptly and boost state oversight of insurers’ conduct following hurricanes.
The IBD/TIPP Financial-Related Stress Index eased for a second straight month, falling 2.5 points to 65.3. Job growth remained solid in November as employers added 263,000 workers, while annual wage growth is a strong 5.1%. Yet just 22% of adults say their wages have kept pace with inflation, though that edged up from 20% in November. Meanwhile, 87% of Americans are concerned about the path of inflation over the next 12 months, down one point from a month ago. A steady 32% of adults are concerned about job loss in their household, but that's down from 38% in October and 34% in September. The U.S. Economic Optimism gauge climbed 2.3 points among investors to an even 50, right at the neutral level. IBD/TIPP counts as investors those respondents who say they have at least $10,000 in household-owned mutual funds or equities.
Florida has struggled for years to curb surging home insurance premiums and hold on to private insurers in a market where devastating hurricanes weigh heavily on the cost of business. Six insurers have left the state this year. Hurricane Ian, which slammed into the southwest coast in late September and inflicted widespread damage to homes and businesses across the state, caused an estimated $40 billion to $70 billion in insured losses. Photo: Prensa Libre: Hemeroteca PL Source: https://www.usnews.com/news/best-states/florida/articles/2022-12-12/floridalawmakers-hope-to-aid-ailing-home-insurance-market
Source: https://www.investors.com/news/economy/recession-fears-ease-for-us-economyas-gas-prices-fall-dow-jones-rallies-ibd-tipp/
December 14, 2022
December 15, 2022
Retail sales fell 0.6% in November as consumers feel the pressure from inflation Consumers pulled back on spending in November, failing to keep up with even a muted level of inflation for the month, the Commerce Department reported Thursday. Retail sales for the month declined 0.6%, even worse than the Dow Jones estimate for a 0.3% drop. The number is not adjusted for inflation as gauged by the Labor Department’s consumer price index, which increased 0.1% in November, which also was below expectations.
Photo: REUTERS/Evelyn Hockstein
Federal Reserve raises interest rates to highest since 2007, sees higher rates in '23 The Federal Reserve raised short-term interest rates Wednesday by 0.50%, bringing benchmark interest rates to the highest level since 2007 while suggesting more rate hikes are coming in 2023. Wednesday's move brings the Fed funds rate to a range of 4.25%-4.5%, capping a year that saw the central bank raise rates by a collective 4.25%.
Stocks fell sharply following a mostly disappointing round of economic data released Thursday morning. The Dow Jones Industrial Average was off nearly 500 points in early trading. The pullback was widespread across categories. Furniture and home furnishings stores reported a decrease of 2.6%, building materials and garden centers were off 2.5%, and motor vehicle and parts dealers dropped 2.3%. Even with declining gas prices, service stations sales were down just 0.1%. Measures that exclude autos and both autos and gas sales both showed 0.2% declines. Online sales also decreased, falling 0.9%, while bars and restaurants increased 0.9%, and food and beverage stores rose 0.8%.
New economic forecasts from the Fed published Wednesday show officials now see benchmark interest rates peaking at 5.1% in 2023, an extra 50 basis points higher than the previously projected 4.6% back in September. Officials then see rates coming down to 4.1% in 2024, slightly higher than previously projected. Officials don’t see core inflation coming back down close to target until 2024, with inflation rounding out this year at 4.8% before falling to 3.5% next year and 2.5% in 2024. Officials see unemployment rising to 4.6% next year and remaining at that level through 2024. The Fed sees below-average economic growth, with the economy barely growing next year at just 0.5% before picking up slightly to 1.6% in 2024. Source: https://finance.yahoo.com/federal-reserve-raises-interest-rates-to-highest-since2007-sees-higher-rates-in-23-190034046.html
Photo: Mark Makela | Getty Images Source: https://www.cnbc.com/2022/12/15/retail-sales-november-2022-sales-fall0point6percent-as-consumers-feel-pressure-from-inflation.html
December 16, 2022
Photo: Bloomberg / Getty Images
Cooling economy is giving US workers a lift The red-hot labor market is cooling. Monthly US job growth has slowed to around 270,000 from more than 500,000 at the start of the year. Employers are staffing up, returning average work weeks to pre-pandemic levels. Labor-market churn has subsided, with the rate at which workers are quitting their jobs falling back to early 2021 levels. Hiring rates have fallen, too. And yet despite all this, the fortunes of US workers have arguably improved more over the past few months than they have all year. Gradual normalization from pandemic and supply-chain disruptions are benefiting both employers and workers. Think of it as a one-off productivity dividend as the economy becomes more efficient. So now we’re in a period where Wall Street points to the slowing labor market as evidence of elevated recession risks heading into 2023. Meanwhile real earnings are growing nicely once again, with consumption accelerating as well, which is why the Atlanta Fed’s tracker suggests that real gross domestic product growth this quarter could exceed 3%. We normally think about real economic growth as a function of employment growth and productivity growth. What we’re now experiencing — supply chains healing, companies’ labor needs easing and workers reaping the benefits of lower prices with a boost to their inflation-adjusted wages — could be called productivity growth. Source: https://www.washingtonpost.com/business/energy/cooling-economy-is-giving-usworkers-a-lift/2022/12/15/d0d4d38c-7c70-11ed-bb97-f47d47466b9a_story.html