US Economic Data Shows Decrease in Inflation, but Views Differ on Possibility of Soft Landing for the US Economy
The report for October, which was published on Tuesday, indicated a decrease in inflation to 3.2%. Additionally, the core inflation rate, which excludes food and energy, was at an annual rate of 2.8% over the last five months leading up to October. This is a significant improvement from the 5.1% annual pace recorded in the first five months of the year.
It is noteworthy that this significant drop in inflation occurred simultaneously with employers continuing to create jobs, and there were no apparent indications that economic growth was slowing down.
From August to October, American companies hired an average of 204,000 workers per month, which is a significant decrease from the earlier post-pandemic period but is still higher than the average of 163,000 in 2019. Although the unemployment rate has risen slightly to 3.9%, it remains historically low.
The deceleration in wage growth has further strengthened the declining pattern of inflation. In October, average hourly earnings increased by 4.1% on an annual basis, marking a low since June 2021. This is due to decreased competition among companies for employees.
However, there is no assurance of a soft landing. One of big questions is whether consumers, who have been the driving force behind the economic recovery through their spending, can sustain this level of expenditure remains a significant uncertainty.
Much of consumer spending has come out of savings, which had been reinforced by stimulus measures implemented during the pandemic. The saving rate declined from 5.3% in May to 3.4% in September.
Moreover, for eleven consecutive weeks, there has been a rise in the number of individuals receiving unemployment benefits as of the week concluding on Nov 16th. This is the highest level since April and indicates that those who have been laid off are encountering greater challenges in securing new employment opportunities.
According to Jeremy Schwartz, a senior economist at Nomura, there is a potential danger posed by the elevated interest rates- many households and companies may be more vulnerable to unforeseen shocks. The increased borrowing expenses will make it more expensive for businesses to refinance their obligations, thus increasing their exposure to risk.
The financial situation of households is becoming increasingly fragile. According to the New York Fed, the proportion of credit card borrowers who became delinquent in the third quarter of this year increased to 2%, surpassing pre-pandemic levels.
There are various views among economists on whether the US economy will experience a soft landing.
Source: Reuters, Wall Street Journal, Bloomberg, Goldman Sachs, UBS, ING
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Blizz Amilli : we jus lost another 700 thousand jobs in the United States... this is inaccurate
Blizz Amilli : the government will probably rally the market and try to close out the year with a moving average of about 4600 as they continue to have no debt ceiling, 70% or so of Americans are at least 2months behind on mortgages/bills, give away money to other countries that are only hendering us, spend money backed by nothing on themselves, give ppl more credit with high interest rates, and demand another 1.3million ppl are put out of work to lower inflation rates. Dnt fall victim to the deception. Now is the time to get in position and ride the market out of dependency before this next wave of hardship makes the citizens of this country casualties of malevolent intentions of those in power! this market rally is only because it's November and December is coming ( know the trends) it has nothing to do with the institutions in our market ( check the Stats it was retail, real estate and tech or energy that brought the market back) they are definitely about to do something crafty because it's not the elite that made that money this month. Stay ready to pivot ppl, do your research because the fight is just starting. Jus keeping real
. Y'all be safe and healthy out there 
104402563 : Don’t forget 2024 is a presidential election year.
70682028 : any suggestions on a good penny stock to buy. my daughter just turned 14 and she said she wants to buy $100 in penny stocks and get into trading. I know, not what most 14 yr old girls do with their birthday money but this one is a different breed.
Apoh 70682028: From my experiences with my kids. Just a suggestion. Keep saving enough to buy a pretty solid market cap company which survive through all the various financial crises etc
Meaning, the probability of losing that first 100 is much much higher for a penny company vs the former.
As Warren Buffett said: never lose money. This will encourage the kids even more to reinvest back into their portfolio (dividend) in order to grow their wealth as they have time on their side.
For the record: I’ve Apple and Bank of America. Both companies didn’t fail us through thick and thin at the moment. Having said that, please do your due diligence.
Wishing you guys all the best in your life long investment journey!
Ridwan Lamidi : I don’t know much about the economy but I predicted that inflation may double up in the next future if care is not taken.