Week of Dec 23, 2022 Weekly Recap & The Week Ahead
Happy Holidays — below is the quote from 2017 Berkshire Hathaway shareholder letter about market volatility:
“If you can keep your head when all about you are losing theirs …
If you can wait and not be tired by waiting …
If you can think – and not make thoughts your aim …
If you can trust yourself when all men doubt you …
Yours is the Earth and everything that’s in it.”
1. 3Q GDP Revised to 3.2% rate — the U.S. expanded at an annual 3.2% annual rate in the third quarter, a more robust pace of growth than previously reported, new government figures show. The increase in gross domestic product, the official scorecard for the economy, initially was reported at 2.6% and updated to 2.9% last month. A bigger increase in consumer spending, mostly on services such as travel and recreation, accounted for the stronger GDP print in the third quarter.
2. US Home Sales Dropped by a Record 35% in November — Purchases dropped 35% year-over-year, according to a recent report from Redfin, marking the largest decline since the real estate brokerage started collecting data in 2012. A separate report found sales that of previously owned homes fell for a 10th-straight month in November — the longest string of declines dating back to 1999.
The Federal Reserve’s attempts to tamp down inflation this year have brought the housing market to a screeching halt, with high borrowing costs sidelining potential buyers. It’s a drastic shift from the buying frenzy early in the pandemic that prompted bidding wars and drove home values though the roof.
3. Key Inflation Gauge Cools, US Consumer Spending Misses Forecasts — the personal consumption expenditures price index excluding food and energy, which Fed Chair Jerome Powell has stressed is a more accurate measure of where inflation is heading, rose 0.2% in November from a month earlier, Commerce Department data showed. That matched estimates, but data for the prior month were revised higher. From a year earlier, the gauge was up 4.7%, a step down from a 5% gain in October. The overall PCE price index increased 0.1% and was up 5.5% from a year ago, the lowest since October 2021 but still well above the central bank’s 2% goal. Looking ahead, the central bank is expected to continue raising interest rates into next year — to a higher level than many investors had expected — and remain restrictive for some time. As for the size of any February rate hike, Powell said the decision will be based on incoming data, and others for December to be released throughout next month.