It’s the Most Wonderful Time of the Year (for the Economy): From the New York Times: For many Americans, the end of the year is a time for parties, family gatherings, festive meals and, of course, shopping. And all that holiday celebrating makes the fourth quarter the most important time of the year for the U.S. economy.
Economic data is often seasonally adjusted, meaning the numbers are smoothed out so that trends over time are more visible without the noise of seasonal cycles. But here, the data has not been seasonally adjusted, and December of each year is easy to spot. December’s share of annual retail spending is an average 17 percent higher than it would be if such spending were evenly split across months.
When this pattern breaks, something has gone awry. In the midst of the Great Recession, people cut back on nonessential holiday spending, and end-of-the-year purchases took a significant hit.
In 2020, despite the economic crisis caused by the pandemic, December spending increased from the year prior. Many Americans had extra cash thanks to government stimulus payments, and holiday spending was a large part of how they chose to use it, contributing to the economic recovery.
This seasonal trend is robust enough that it’s visible in our economy beyond just end-of-the-year retail shopping and food.
G.D.P. is a measure of the entire output of our economy. Looking at each quarter’s share of the whole year’s G.D.P., the last quarter of the year nearly always produces more than each of the first three. Americans’ ability to spend their way through the darkest months of the year is a key component in the health of the economy.
As Black Friday and the last few weeks of 2023 approach, economists will be keenly attuned to what consumers are doing. Michelle Meyer, a chief economist at Mastercard, said this was likely to be “a promotion-driven holiday season,” in which shoppers will patiently wait for the best deals.
But Ms. Meyer is still expecting consumers to be “quite active” this year, increasing their holiday spending over last year. In an effort to curb inflation, the Federal Reserve has been raising interest rates over the past 20 months, and experts have been on the lookout for a recession. But for now, there’s hope for an economically festive holiday season.
Mortgage Rates: (from the Associated Press)-Average 30-year U.S. mortgage rate falls for fourth straight week. The average long-term U.S. mortgage rate fell for the fourth time in as many weeks, more positive news for prospective home buyers who have been held back by sharply higher borrowing costs and heightened competition for relatively few homes for sale.
The latest decline brought the average rate on a 30-year mortgage down to 7.29% from 7.44% last week, mortgage buyer Freddie Mac said Wednesday. A year ago, the rate averaged 6.58%.
Despite the recent pullback, the average rate on a 30-year home loan is still sharply higher than just two years ago, when it was around 3%.
Higher rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already out of reach for many Americans. They also discourage homeowners who locked in far lower rates two years ago from selling.
The elevated mortgage rates and a near-historic-low supply of homes on the market have kept a lid on sales of previously occupied U.S. homes, which slumped in October to their slowest pace in more than 13 years and have now fallen 20.2% through the first 10 months of the year versus the same period in 2022.
The average rate on a 30-year home loan climbed above 6% in September 2022 and has remained above that threshold since. Just four weeks ago, it averaged 7.79% — the highest average on record since late 2000.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their mortgage, also declined this week, with the average rate falling to 6.67% from 6.76% last week. A year ago, it averaged 5.9%, Freddie Mac said.
Rates have been declining in recent weeks along with the 10-year Treasury yield, which lenders use as a guide to pricing loans.
Inflation:
From the Financial Times: UK inflation slows sharply to 4.6%-UK inflation slowed sharply to an annual rate of 4.6 per cent in October, driven by a fall in the energy price cap, meaning prime minister Rishi Sunak has met his pledge to halve inflation by year end.
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Unemployment from the Center for Jobs and the Economy: California's reported unemployment rate (seasonally adjusted) in October was up 0.1 point to 4.8% as employment continued to lose ground. The US rate was also up 0.1 point to 3.9%.
California again had the 3rd highest unemployment rate, ahead of only Nevada and DC.
Airfares from the New York Times: Sharp Drop in Airfares Cheers Inflation-Weary Travelers-Airlines are starting to offer bargain prices, including to popular overseas destinations like Paris, a sign that they are fighting to fill planes.
Airfares to many popular destinations have recently fallen to their lowest levels in months, and even holiday travel is far cheaper than it was last year, providing some welcome relief to consumers who have been frustrated for months by high prices for all manner of goods and services.
The glut of deals suggests that the airline industry’s supercharged pandemic recovery may finally be slowing as the supply of tickets catches up and, on some routes, overtakes demand, which appears relatively robust.
Early this month, the average price for a domestic flight around Thanksgiving was down about 9 percent from a year ago. And flights around Christmas were about 18 percent cheaper, according to Hopper, a booking and price-tracking app. Kayak, the travel search engine, looked at a wider range of dates around the holidays and found that domestic flight prices were down about 18 percent around Thanksgiving and 23 percent around Christmas.
Domestic ticket prices fell over the summer, Mr. Potter said, and deals on international travel, particularly to Europe, have become more common recently.
Airlines lower their fares when they are trying to get more people to book tickets as demand is slowing or they are facing stiffer competition. There’s little question that competition has intensified on some routes, but travel experts say it’s not clear whether demand is waning.
Masks from the LA Times: Bay Area reinstates COVID mask orders in healthcare settings. Will L.A. follow?
Most San Francisco Bay Area counties are reinstituting mask requirements among workers in healthcare settings, timed to coincide with the arrival of the annual respiratory illness season and an expected late-year resurgence of COVID-19.
To this point, however, Los Angeles County has not taken that same step. Rather, the county Department of Public Health issued a health order in September requiring healthcare workers to either get both the flu and updated COVID-19 vaccines or mask up when working in patient care areas.
COVID-19 conditions would have to substantially worsen for L.A. County to consider bringing back a more widespread mask mandate in healthcare settings, according to county health officer Dr. Muntu Davis.
Specifically, Davis said Tuesday, the county would need to record 20 or more new coronavirus-positive hospital admissions a week for every 100,000 residents.
The county last exceeded that threshold from mid-January to mid-February 2022, when the then-emergent Omicron variant rapidly spread worldwide, ultimately spawning the second-deadliest wave of the pandemic locally.