“Yesterday’s home runs don’t win today’s games.” … — Unknown

1. US Retail Sales Strengthen on Jump in Motor Vehicle Purchases — The value of retail purchases, not adjusted for inflation, increased 0.7% after upward revisions to the prior two months, Census Bureau data showed Tuesday. Excluding autos, sales climbed a more modest 0.2% for a second month. E-commerce sales jumped 1.8%, as Black Friday and Cyber Monday promotions generated massive sales on platforms like Amazon.com Inc. and TikTok Shop. Receipts at building material stores rose 0.4%. Spending at restaurants and bars, the only service-sector category in the retail report, fell for the first time since March. Grocery store sales also declined. The data suggest consumers remained resilient during the crucial holiday shopping season, lured by discounts and bolstered by incomes that have been rising faster than prices. Measures of confidence have also been climbing since the November election, and some consumers have reported they could avoid higher prices from possible new tariffs imposed by the Trump administration by purchasing big-ticket items now.
2. Fed cuts by a quarter point, indicates fewer reductions ahead — In a move widely anticipated by markets, the Federal Open Market Committee cut its overnight borrowing rate to a target range of 4.25%-4.5%, back to the level where it was in December 2022 when rates were on the move higher. In delivering the 25 basis point cut, the Fed indicated that it probably would only lower twice more in 2025, according to the closely watched “dot plot” matrix of individual members’ future rate expectations. The two cuts indicated slice in half the committee’s intentions when the plot was last updated in September. Assuming quarter-point increments, officials indicated two more cuts in 2026 and another in 2027. Over the longer term, the committee sees the “neutral” funds rate at 3%, 0.1 percentage point higher than the September update as the level has drifted gradually higher this year.
3. Trump, Musk Throw Congress Into Chaos With US Shutdown Looming — With less than two days until federal agencies shutter, House Republicans huddled Thursday in Johnson’s office and struggled to write a Plan B that could appease Trump and his agitator-in-chief, Elon Musk. The last-minute dealmaking followed an extraordinary day Wednesday. Backroom spending discussions on Capitol Hill spilled out into an open clash on X, with Musk, the social media platform’s owner, denouncing the compromise Johnson had negotiated to keep funding going into next year.
The drama left Johnson, just days after sitting with the president-elect at the Army-Navy football outside Washington, meeting with allies in his Capitol office to come up with a new plan to keep the government financed and avoid the political pain of a shutdown before the funding deadline lapses on Friday night.
4. US Growth Revised to 3.1% on Stronger Consumer Spending, Exports — Gross domestic product increased at a 3.1% annualized rate in the July-to-September period, the third estimate of the figures from the Bureau of Economic Analysis showed Thursday. That compared to a previous projection of 2.8%. Growth in consumer spending was marked up to 3.7% — the fastest since early 2023 — and exports also grew faster than previously estimated, both thanks to services.
5. Fed’s Favored Inflation Gauge Cools to Slowest Pace Since May — The so-called core personal consumption expenditures price index, which excludes food and energy items, increased 0.1% from October and 2.8% from a year earlier, according to Bureau of Economic Analysis data out Friday. The monthly advance was the slowest since May. The data marks one of the first reports indicating renewed progress on inflation after stalling in recent months. That had prompted Fed officials to update forecasts earlier this week showing a higher path for prices and interest rates in 2025, which helped trigger a broad market selloff.

The week ahead — Economic data from Econoday.com:

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