11/11/2024 MUNDO WALL STREET
Economic Summary: Week of November 4 to 10
1. October Inflation Data Brings Moderate Optimism
The inflation report published last week showed that the Consumer Price Index (CPI) increased by 0.2% in October, a significant slowdown compared to previous months. This brought year-on-year inflation to 3.4%, bringing it closer to the 2% target set by the Federal Reserve.
The moderation in the price increase was driven mainly by a drop in energy costs and a stabilization in food prices. However, services, including rents and insurance, continue to be a source of inflationary pressure.
This data reinforces the possibility of the Federal Reserve maintaining interest rates unchanged during the rest of the year, since monetary policy measures seem to be taking effect.
2. The Labor Participation Rate Recovers
One of the most prominent data of the week was the increase in the labor participation rate, which rose to 62.9%, the highest level since 2020. This indicates that more people are returning to the labor market, either for better employment prospects or for the need for additional income due to economic pressure.
The sectors that led this return were hospitality, health care and light manufacturing, where companies continue to hire to meet high seasonal demand. This increase is a positive sign for the labor market, since a greater number of people working or looking for employment tends to balance wage pressures and support long-term economic growth.
3. International Trade and its Impact on the U.S. Economy USA.
The U.S. trade deficit fell unexpectedly in October, falling 4.5% thanks to an increase in exports of agricultural goods and technology, as well as a decrease in imports of consumer goods.
This change reflects a global economy that is beginning to stabilize, although it still faces significant challenges in regions such as Europe and Asia, where the economic slowdown remains a problem.
The improvement in exports is also a sign that US companies are capitalizing on international markets despite the strong dollar, which usually makes US products more expensive abroad.
4. The Holiday Season and Consumer Confidence
The Consumer Confidence Index experienced a slight increase in November, rising 1.2% compared to October. This growth was driven by renewed optimism in the economy and by early promotions launched by retailers for the year-end shopping season.
However, analysts warn that confidence remains fragile due to concerns about persistent inflation and the high cost of credit. Consumers seem to be prioritizing practical purchases and discounts, while luxury categories have shown a decline in sales.
The next few weeks are expected to be key to measuring the health of consumer spending, which represents almost 70% of economic activity in the United States.
5. Financial Markets: Prudent Optimism
Stock markets closed the week with moderate gains, driven by positive news about inflation. The S&P 500 rose 1.4%, led by the technology and discretionary consumption sectors, while the Nasdaq recorded a rise of 1.7%.
In the bond market, 10-year Treasury bond yields fell to 4.5%, their lowest level in two months, reflecting expectations that the Federal Reserve will maintain a more cautious stance in the coming months.
On the other hand, cryptocurrencies continued to show volatility, with Bitcoin rising 6% after a major global bank announced plans to integrate blockchain-based services into its infrastructure.
6. Key Approaches for the End of the Year
With only a few weeks left in the year, analysts are closely monitoring the following key factors:
Federal Reserve Policy: While no additional rate increases are expected this year, November and December data will be crucial in determining the Fed's approach in 2025.
Retail performance: The holiday season will be a critical thermometer to measure the health of the American consumer and their ability to spend amid economic pressures.
Global situation: Changes in international trade and geopolitical tensions could have indirect effects on the US economy.
Conclusion
The economic outlook continues to show mixed signs, with significant advances in inflation and employment, but with persistent challenges in other areas. At Mundo Wall Street, we will continue to analyze these trends and their impact on your personal and professional finances.
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