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? - 19 May 2023
Wells Fargo Economics & Financial Report / May 23, 2023
Economic data continue to suggest the U.S. economy is only gradually losing momentum. Consumers continue to spend, and industrial and housing activity are seeing some stabilization.
This Week's State Of The Economy - What Is Ahead? - 12 June 2020
Wells Fargo Economics & Financial Report / Jun 13, 2020
Lock downs began to be lifted across most of the country by the end of May and the total amount of daily new coronavirus cases has been trending lower. But the flattening case count has not been consistent across the country.
This Week's State Of The Economy - What Is Ahead? - 02 June 2023
Wells Fargo Economics & Financial Report / Jun 06, 2023
This week, Congress and the president prevented what would have been the first default in U.S. history by agreeing to suspend the debt ceiling through the end of 2024.
This Week's State Of The Economy - What Is Ahead? - 17 May 2024
Wells Fargo Economics & Financial Report / May 23, 2024
The Producer Price Index (PPI) was a bit firm in April, rising 0.5% amid higher services prices, though it did come with slight downward revisions to prior month\'s data.
This Week's State Of The Economy - What Is Ahead? - 09 June 2023
Wells Fargo Economics & Financial Report / Jun 14, 2023
An unexpected spike in jobless claims is a sign that cracks are forming in the labor market. Higher mortgage rates look to be hindering a housing market rebound.
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.
25 January 2021 Economic Outlook Report
Wells Fargo Economics & Financial Report / Jan 30, 2021
In the second installment of our series on economic risks in the foreseeable future, we analyze the potential for higher inflation in coming years stemming from excess demand.
This Week's State Of The Economy - What Is Ahead? - 07 February 2020
Wells Fargo Economics & Financial Report / Feb 08, 2020
U.S. employers added 225K new workers to their payrolls in January, which handily beat expectations. But the factory sector shed jobs for the third time in four months, and net layoffs were reported for finance and retail as well.
This Week's State Of The Economy - What Is Ahead? - 11 June 2021
Wells Fargo Economics & Financial Report / Jun 26, 2021
Okay, so I’ve gotten about half a dozen calls since Wednesday asking if I saw the May CPI numbers that came out this week.
This Week's State Of The Economy - What Is Ahead? - 15 November 2024
Wells Fargo Economics & Financial Report / Nov 20, 2024
The Consumer Price Index (CPI) rose 0.24% in October, the largest unrounded monthly uptick since April. This bump brought the 12-month rate to 2.6%, the first annual acceleration since inflation’s hot streak in Q1.
