Read the highlights of this week’s commentary from Helios:
- The US economy grew by 2.3% in the fourth quarter of 2024, driven by strong consumer spending despite challenges from a Boeing strike and reduced inventory investments. Consumer spending, the largest component of economic activity, surged by 4.2%, marking the biggest acceleration since early 2023, primarily driven by increased car sales. Looking ahead, 2025 is projected to experience moderate growth, with new tariffs potentially impacting domestic production and economic stability.
- In December, the Federal Reserve’s preferred inflation metric, the core personal consumption expenditures (PCE) price index, which excludes food and energy costs, rose modestly by 0.2% from November and 2.8% year-over-year. This muted inflation trend supports the possibility of further Fed interest rate cuts this year. Despite a slight rise in real disposable income, the savings rate dropped to its lowest in two years, signaling financial vulnerability among consumers.
- The Trump administration has announced that the US will implement a 25% tariff on Mexico and Canada and a 10% tariff on China, taking effect at 12:01 AM on February 4. In response, the leaders of Mexico and Canada have committed to countering any trade levies with retaliatory tariffs, while also seeking to reassure the US that they are addressing border issues in an effort to deescalate the conflict.
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