NEWS
What Happened Last Week
The Consumer Price Index (CPE) rose 0.3% in November, in line with expectations. Regardless of whether food, energy and rental costs are included, inflation is still running above the Fed’s target 2% average.
The NFIB Small Business Optimism Index rose above its 50-year average of 98 for the first time since June 2021, meaning small businesses are feeling much more optimistic about at least the next 3-6 months ahead.
The Federal deficit has continued to run extraordinarily high in the years since COVID, which has assisted with economic growth. But what happens if that deficit is cut dramatically? Cuts may mean long-term benefits with short-term potential difficulty unless tax cuts, deregulation and other policy changes can boost the economy enough to counter the loss in government jobs and spending.
American households expecting their financial situation to be better a year from now jumped to 37.6% in November, an increase of about 8% from October.
Outlooks on government debt increases have become more moderated, which also improved sentiment.
Investor sentiment remains cautiously optimistic as the US market has trended sideways these past two weeks, according to the AAII Investor Sentiment Survey and Fear and Greed Index.