US Economy: Another Mostly Pretty Picture

Today's batch of December economic indicators in the US has mostly eased any downside concerns about the labor market, consumers, and the economy overall. The Atlanta Fed's GDPNow tracking model is now showing Q4-2024 real GDP growth of 3.0% (saar), driven by a 3.7% increase in consumer spending on goods (chart). The latter was revised up from 3.3% after retail sales was released today. Data for January are now showing a potential rebound in the manufacturing sector.

It's clear that the Federal Open Market Committee (FOMC) erred by easing monetary policy too soon and by too much, as we've said since September 18, when they cut the federal funds rate by 50bps and followed up with two more 25bps cuts in November and December. (Our offer stands to the DOGE Boys: We will do what the Fed does for half the cost.)