Read the highlights of this week’s commentary from Helios:
- US GDP grew at an annualized rate of 3.3% in the fourth quarter, driven by a decrease in inflation that stimulated consumer spending. In 2023, the economy expanded by 2.5%, concluding a year that was unexpectedly robust and defied predictions of a recession.
- The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Index, which excludes the more volatile food and energy components, fell to a three-year low of 2.9% in December. Annualized over the last six months, core PCE inflation was 1.9% in December, below the Fed’s 2% target.
- Core PCE service-sector inflation increased at a 2.6% rate, the slowest since the end of 2020. Consumer spending, which
accounts for about two-thirds of the economy, saw broad growth across various sectors, contributing 1.9 percentage points to GDP.
- Treasury Secretary Janet Yellen expressed uncertainty about the future of interest rates post-pandemic, marking a shift from her previous expectation of returning to weak inflation. She acknowledged the ongoing debate about whether rates will revert to pre-pandemic levels, contrasting with her earlier dismissal of a return to high rates of the ’70s and ’80s.
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