Weekly Talking Points for Financial Advisors (12/23/24)

Read the highlights of this week's commentary from Helios:

• The Federal Reserve lowered its benchmark interest rate by 0.25 percentage points to a range of 4.25% to 4.5%. New forecasts suggest just two rate cuts in 2025, down from four projected in September, with the federal funds rate expected to settle between 3.75% and 4% by year-end. The median inflation projection for 2025 rose to 2.5% from 2.1% in September, signaling slower progress than previously anticipated.
• The Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, which excludes food and energy prices, slowed to 0.1% in November, down from 0.3% in October, but held steady at 2.8% year-over-year. While this marks the slowest monthly inflation pace since August, the steady annual rate underscores ongoing inflation pressures in core goods and services.
• US retail sales rose 0.7% in November, boosted by car sales and online shopping, with growth in seven of 13 categories. Auto sales hit a three-year high, though consumers spent less on dining out, a key discretionary service indicator. While spending is projected to grow 3.0% this quarter, the increase appears to be driven by temporary factors like the wealth effect and 'buy-in-advance' behavior rather than fundamentals such as job creation.

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