Spending for the Holidays (from the New York Times): The consumer is back — but for how long? Black Friday and Cyber Monday shopping bonanzas hold outsize political significance this year with the retailing events emerging as key recession and inflation indicators. So far, so good. Bargain hunters turned out in force for Black Friday sales, and Cyber Monday is forecast to be even bigger. But with consumers showing signs of pulling back on spending, will this splurge be enough to save retailers’ Christmas and keep the U.S. economy from contracting or even plunging into recession?
The White House is paying attention. Consumers have grown pessimistic about the economy, data shows. At the same time, President Biden’s polling numbers have fallen, with the economy seen as a glaring weaknesses.
Biden’s advisers are pushing back. This past weekend, they pointed to strong Black Friday data as a sign of the economy’s resilience. Still, inflation remains a particular sore point with voters. According to The Washington Post, the White House has begun tracking inflation gripes posted on social media.
The Fed will be watching, too. Inflation remains well above the central bank’s 2 percent target, prompting Jay Powell, the Fed chair, to signal that policymakers will likely keep borrowing costs higher for longer in an effort to cool down prices. This month’s retail data could be a factor in how the central bank approaches its interest rates policy next year.
Inflation:
From the Financial Times: Eurozone inflation falls more than expected to 2.4%
Inflation in the eurozone has fallen far more than expected to 2.4 per cent in November, the slowest annual pace since July 2021, providing some relief to consumers and raising hopes that interest rates could soon be cut.