{"id":12256,"date":"2023-02-06T19:22:13","date_gmt":"2023-02-06T19:22:13","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12256"},"modified":"2023-02-06T19:22:14","modified_gmt":"2023-02-06T19:22:14","slug":"u-s-consumer-spending-falls-smaller-rate-hike-chinas-economy-roars-back","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/u-s-consumer-spending-falls-smaller-rate-hike-chinas-economy-roars-back\/","title":{"rendered":"U.S. Consumer Spending Falls, Smaller Rate Hike, China&#8217;s Economy Roars Back\u00a0"},"content":{"rendered":"\n<p>In today\u2019s Steady Investor, we are taking a deeper dive into key factors that we believe are impacting the future state of this market, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>U.S. consumer spending<\/li>\n\n\n\n<li>Fed scales down size of rate hikes<\/li>\n\n\n\n<li>China\u2019s economic recovery<\/li>\n<\/ul>\n\n\n\n<p><strong>Is the U.S. Consumer Finally Losing Steam? <\/strong>The U.S. consumer pulled back from spending in December, which generally tends to be a strong month with holiday shopping. For the month, spending on services like rent, utilities, and dining out was flat, but when adjusted for inflation marked the weakest reading in 11 months. Throughout most of 2022, spending outpaced inflation by about 2% on average. As seen in the chart below, goods spending as measured by retail sales also appears to be turning over, as consumers are confronting shorter runways with pandemic-era savings<sup>1<\/sup>:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"393\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/02\/siwphoto-1024x393.png\" alt=\"\" class=\"wp-image-12257\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/02\/siwphoto-1024x393.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/02\/siwphoto-300x115.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/02\/siwphoto-768x295.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2023\/02\/siwphoto.png 1178w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Source: Federal Reserve Bank of St. Louis<sup>2<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-advisor-stack?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_02_04&amp;content=advisor_stack_up\">Is Your Advisor Adding Value to Your Investment Portfolio?<\/a><\/strong><\/p>\n\n\n\n<p>In a recent survey, about 60% of respondents said they think their financial advisors serve their companies\u2019 interests more than their clients\u2019 interests. Is your investment advisor looking out for your interests?<\/p>\n\n\n\n<p>To help you answer this question, we are offering our exclusive guide, <em>Does Your Investment Advisor Stack Up?<\/em><sup>3 <\/sup>You\u2019ll learn more about advisor \u201cred flags\u201d including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>If you receive a \u201cone-size-fits-all\u201d investment strategy<\/em><\/li>\n\n\n\n<li><em>If your advisor earns commissions on your investments<\/em><\/li>\n\n\n\n<li><em>If you can\u2019t easily understand your portfolio\u2019s performance<\/em><\/li>\n\n\n\n<li><em>If your advisor does not clearly disclose all fees&nbsp;<\/em><\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, our exclusive guide today for our opinions about factors that determine whether investors are getting what they pay for from their advisors.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-advisor-stack?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_02_04&amp;content=advisor_stack_up\">Download Our Free Guide, Does Your Investment Advisor Stack Up?<sup>3<\/sup><\/a><\/strong><\/p>\n\n\n\n<p>November also marked a relatively weak month, though October was strong as consumers shifted holiday shopping to earlier in the season to take advantage of steep discounts at retailers. As consumer spending accounts for some 70% of the economy, where spending goes in the months ahead will be worth watching closely.<\/p>\n\n\n\n<p><strong>The Fed Scales Down Size of Rate Hikes with a 25 Basis Point Increase \u2013 <\/strong>As largely expected, the Federal Reserve raised its benchmark fed funds rate by 25 basis points, to a range of 4.5% &#8211; 4.75%. The Fed had telegraphed plans to potentially ratchet down the size of rate hikes, as inflation has been trending in the right direction and as wage growth decelerates (though remains elevated). Earlier this week, the Fed\u2019s preferred inflation gauge \u2013 the personal-consumption expenditures (PCE) price index \u2013 was reported to have increased by 5% year-over-year in December, a solid improvement from November\u2019s 5.5% print and also the lightest inflation reading since September 2021. The Core PCE-price index, which measures inflation minus food and energy, rose 4.4%. While these inflation readings are still roughly double the Fed\u2019s 2% target, they are steps in the right direction and it is worth noting that the Fed wants 2% <em>average <\/em>inflation, which may mean settling for inflation slightly higher than the target. On a month-to-month basis, the PCE price index was up 0.1% from November, also encouraging.<sup>4<\/sup><\/p>\n\n\n\n<p><strong>Looking for a Boom \u2013 The Early Days of China\u2019s Economic Recovery \u2013 <\/strong>China is expected to have a strong rebound year in 2023, with the country finally ending its \u201czero Covid\u201d policies. January was a great start. According to official metrics measuring services, manufacturing, and construction activity, China swung back into expansion mode following a very weak end of last year. China\u2019s nonmanufacturing PMI, which measures key services and manufacturing activity, crossed above 50 (signaling expansion) for the first time since last September \u2013 a drastic improvement from December\u2019s 39.4 reading. Manufacturing activity was also above 50 for the first time since August, and a marked improvement from December\u2019s 47.0 reading. Consumers also showed strong signs of getting back out and spending, despite a surge of infections. Box-office revenues were the highest on record for a Lunar New Year holiday, and train travel surged back to 83% of 2019 levels. China is still in early days of testing a light restriction approach to Covid-19, so it is too early to determine whether this rebound in activity will be sustainable in the coming months. But so far, the growth trends are promising.<sup>5<\/sup><\/p>\n\n\n\n<p>While we may not know how all these stories will pan out, or how they could affect the market in the long-term, having an investment advisor that helps you reach your long-term goals can be critical to your financial well-being.<\/p>\n\n\n\n<p>But is your advisor delivering? Unfortunately, many clients don\u2019t think so. That\u2019s why we developed our FREE guide, <em><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-advisor-stack?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2023_02_04&amp;content=advisor_stack_up\">Does Your Investment Advisor Stack Up?<\/a><\/strong><\/em><\/p>\n\n\n\n<p>Get our opinions about these critical advisor warning signs:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>If you receive a \u201cone-size-fits-all\u201d investment strategy<\/em><\/li>\n\n\n\n<li><em>If your advisor earns commissions on your investments<\/em><\/li>\n\n\n\n<li><em>If you can\u2019t easily understand your portfolio\u2019s performance<\/em><\/li>\n\n\n\n<li><em>If your advisor does not clearly disclose all fees&nbsp;<\/em><\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, our exclusive guide today for our opinions about factors that determine whether investors are getting what they pay for from their advisors.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fed scales back size of latest rate hike, consumer spending loses steam, Chinese economy shows signs of strong rebound in 2023<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12256","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12256","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12256"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12256\/revisions"}],"predecessor-version":[{"id":12259,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12256\/revisions\/12259"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}