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🦧 rates, retail, and labor
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the s&p 500 closed ~2.5% on thursday for two big reasons
weak retail sales
the rate hike continues
the fed announced another .50% interest rate hike yesterday
granted, the fed raised rates by .75% the last four meetings (the most aggressive stretch since the 1980s), but the 0.50% this time around is not negligible
the fed funds rate is now in the range of 4.25~4.5%, bringing the benchmark interest rate to the highest level since '07
the announcement on wednesday also included hints that the fed will continue to rate rates next year – officials now see rates peaking at 5.1% next year, .50% higher than the previously projected 4.6% in sept.
weak us retail sales
the us retail sales for november were $689.4b, down .6% from october
this time of the year, usually, would show patterns of increased holiday-season shopping and surge in consumer spending
aside from a few categories like grocery stores and health/personal care stores, sales declined in many categories, including motor vehicle, furniture, electronics, clothing, general merchandise, etc.
this marks an abrupt shift in consumer spending, as october retail sales were up 1.3% from the prior month
also, the job market
in the midst of all this though, the us labor market seems to be strong yet again
weekly initial jobless claims came at 211k, lower than the economists' consensus of 232k
despite the white-collar layoffs we see in the media (i.e. tech, banking), hiring has remained strong across many other industries
typically, this would be nothing but good news, but for the time being, it does mean that the resilient labor market may lead to the fed needing to keep raising interest rates to combat persistently high inflation
to all my student readers, good luck with finals!
💡 something im thinking about
scotus on monday rejected a bid from the tobacco industry to block proposition 31, which was approved in nov. to prohibit the sale of most flavored tobacco products (click image)