Last Week: -0.45%
YTD: 2.69%
1 Year: 23.30%
Dow Jones Industrial Average
Last Week: -0.67%
YTD: 4.71%
1 Year: 7.20%
Last Week: -0.68%
YTD: 1.49%
1 Year: 26.22%
Last Week: -0.12%
YTD: 2.50%
1 Year: 17.87%
YTD: 1.97%
1 Year: 28.15%
YTD: 4.63%
1 Year: 18.55%
Economic Growth Strong But Under Forecast
Economic growth in the U.S. decelerated to a 2.3% annualized rate in Q4 2024, below the forecasted 2.5%, with strong consumer spending offsetting declines in trade and private investment. Despite inflationary pressures, household spending remained robust, rising by 4.2% and contributing to a full-year GDP increase of 2.8%. The Federal Reserve maintained a cautious stance on monetary policy after cutting interest rates by 1% during the final months of the year. Although inflation deceleration may have stalled, unemployment claims declined sharply, signaling ongoing resilience in the economy.
Inflation Stays Elevated
Inflation remained strong at the end of 2024, with the personal consumption expenditures (PCE) price index rising 2.6% year-over-year in December, surpassing the Fed’s 2% target. Core PCE, excluding food and energy, held steady at 2.8%, reflecting ongoing inflationary pressures despite stable monthly increases. The Federal Reserve paused interest rate adjustments after prior cuts, maintaining the current range of 4.25% to 4.5% as officials signaled caution until clearer signs of inflation decline emerge. Personal income rose 0.4%, while spending outpaced it at 0.7%, contributing to economic resilience amid elevated price levels.
Trump Imposes Tariffs With Key Trade Partners
President Trump imposed a 25% tariff on goods from Mexico and Canada and a 10% tariff on imports from China, with a lower 10% tariff on Canadian energy imports. Canada responded with retaliatory tariffs, while China announced plans to file a complaint with the World Trade Organization. U.S. automakers and major importers, including Constellation Brands and Chipotle, saw significant stock declines amid concerns about rising costs. Despite emerging trade war risks, the S&P 500 and Dow Jones closed January with gains, though investors remain cautious ahead of key earnings reports and labor market data.