→ Today’s featured press release (By PressReach)
The Commerce Department reported that consumers spent less in December and that the pace of price increases, as measured by the Personal Consumption Expenditure (PCE) Index, has slowed.
The PCE index, considered key by the Federal Reserve, showed a 4.4% year-on-year increase from 4.7% in November.
This slower pick-up in consumer spending and inflation, along with other economic data, has fueled expectations of a 2023 recession.
The Fed has been closely monitoring the impact of its rate hikes on the economy.
Data shows that inflation-adjusted spending fell 0.2% in December, worse than the 0.1% drop Wall Street had been expecting. Despite income growth of 0.2%, in line with estimates, consumers spent less.
They have raised their benchmark interest rate to a target range of 4.25% to 4.5% to bring down inflation.
Markets expect another quarter-point rise at the next Federal FOMC meeting, followed by a similar rate hike in March, after which the Fed is expected to pause and assess the impact of its rate hikes on the economy.
US stock futures fell ahead of Friday’s opening bell as investors reacted to new data showing consumer spending rose at a slower pace in December.
This is a closely watched Federal Reserve move that could portend a slowdown in the economy and a potential recession.
The yield on the benchmark 10-year Treasury bond rose to 3.52% from 3.497% on Thursday. This suggests that investors are less confident in the economy and are looking for safer assets such as bonds. The higher yield also makes bonds more attractive to investors, which can reduce demand for stocks and other riskier assets.
The dollar index, which measures the value of the US dollar against a basket of foreign currencies, has changed little.
A stronger dollar can make US exports more expensive and less competitive in the world market and affect the US economy.
WTI crude, a gauge of global oil prices, was up about 1%, trading near $82 a barrel. Rising oil prices can indicate stronger energy demand and indicate a growing economy.
However, it can also lead to inflation and higher costs for consumers and businesses.
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