As we look forward to what the new year has to offer, we dive into key factors that we believe could impact the future of the market such as:
• Strength in holiday spending
• Inflation approaching the Fed’s target
• The housing market is heating up
Holiday Spending Underscores Ongoing Consumer Strength – U.S. consumers didn’t hold back when shopping this holiday season. According to Mastercard SpendingPulse, shopping sales between the beginning of November and Christmas Eve climbed 3.1%, which is largely in line with what the National Retail Federation is projecting for the combined November-December shopping period. This data will be released in January, and should be compared to the 3.6% average shopping growth posted between 2010 and 2019, before the pandemic ‘skew.’ Mastercard’s SpendingPulse showed that online sales rose a stout 6.3% while in-person spending was up 2.2%. This data tracks with firm spending data for November, where consumer spending was seen rising 0.2% month-over-month, and personal income rose 0.4%.1
Get Our Latest Insights in our Year in Review
2023 was a mixed bag of positive and negative events. In our free 2023 Year in Review, we take a closer look at the most impactful economic and market events and trends and offer our expert insights as to what all this means for investors in the year ahead.
Get your report now for our discussion of 2023’s key stories including:
• Inflation locks into a downtrend
• The “financial crisis” that never was
• The U.S. economy defies expectations, and interest rates jump
• What to expect in 2024
If you have $500,000 or more to invest, download our free review below!
Download Our Exclusive “Zacks 2023 Year in Review”2
Santa Brought Lower Inflation and Higher Stock Prices – A normally closely-watched inflation gauge went under the radar for November, given its release date of the Friday before the Christmas holiday. But it should have made big headlines. The personal-consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred inflation gauge, fell 0.1% from October to November, the first decline since the pandemic (April 2020). On a year-over-year basis, prices rose 2.6%, which is a stone’s throw from the Fed’s 2% target. As we’ve pointed out in this newsletter before, however, it’s worth remembering that the Federal Reserve wants 2% average inflation over time, which implies that sometimes inflation could technically run above or below the target. Core prices, which exclude food and energy, rose 1.9% on a 6-month annualized basis, which all but confirms the Federal Reserve is indeed done raising interest rates in this cycle. As seen from the chart below, inflation remains firmly locked in a downtrend.3
Personal Consumption Expenditures Price Index, Year-over-Year % Change
Is the U.S. Housing Market Poised for a Rebound in 2024? Existing home sales make up most of the U.S. market, and good news arrived in November. Sales were up 0.8% from October to a seasonally adjusted annual rate of 3.82 million, which provides a much-needed boost to the weakest year for sales in over a decade. The upshot is that sales accelerated even as mortgage rates were climbing since the sales logged in November likely went under contract in September or October. Since then, mortgage rates have come down – as of last week, Freddie Mac reported that the average rate on the standard 30-year fixed mortgage was 6.67%, marking the seventh straight week of declines. This is a marked decline from the near 8% mortgage rates logged this fall and could result in more enthusiastic buyers heading into the new year.5
Looking Back to Prepare for 2024 – 2023 has been an eventful year for the economy and markets. It’s important to examine events that have influenced this current market to better prepare for what’s to come in 2024.
Our free Zacks 2023 Year in Review is now available and covers 2023’s key stories including:
• Inflation locks into a downtrend
• The “financial crisis” that never was
• The U.S. economy defies expectations, and interest rates jump
• What to expect in 2024
We hope this report helps you navigate the current market and best prepare your investment strategy for the year ahead. If you have $500,000 or more, download our free review below!
Download Our Exclusive “Zacks 2023 Year in Review”6
Disclosure
2 Zacks Investment Management reserves the right to amend the terms or rescind the free 2023 Year in Review offer at any time and for any reason at its discretion.
3 Wall Street Journal. December 22, 2023. https://www.wsj.com/economy/what-to-watch-in-fridays-spending-report-inflation-closing-in-on-feds-target-0778037d?mod=djem10point
4 Fred Economic Data. December 22, 2023. https://fred.stlouisfed.org/series/PCEPI#
5 Wall Street Journal. December 20, 2023. https://www.wsj.com/economy/housing/housing-heats-back-up-7ffcb282?mod=economy_feat2_housing_pos1
6 Zacks Investment Management reserves the right to amend the terms or rescind the free 2023 Year in Review offer at any time and for any reason at its discretion.
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