Unadorned Notes: December 18-23, 2024
Consumer Spending Gains Amid Inflation; Jobless Claims Drop, GDP Revised; Fed’s 2025 Voters Shift Hawkish; Congress Avoids Shutdown, Defies Trump; Taiwan Risks Peak by 2031
Economics, Finance, and Business
Consumer Spending Gains Amid Inflation: U.S. consumer spending rose 0.4% in November 2024, supported by strong demand across goods and services, while inflation showed modest monthly increases, with core inflation posting its smallest rise in six months. The personal consumption expenditures (PCE) price index increased 2.4% annually, remaining above the Federal Reserve’s 2% target, though housing inflation moderated. The Federal Reserve maintained a cautious outlook, projecting fewer rate cuts in 2025 and emphasizing economic resilience despite persistent inflationary pressures. Personal income grew 0.3%, driven by a 0.6% rise in wages, though lower-income households continued to face financial strain. The Atlanta Fed estimates fourth-quarter GDP growth at 3.1%, underpinned by robust consumer activity.1
Existing-Home Sales Rise: Existing-home sales increased 4.8% in November 2024 to a seasonally adjusted annual rate of 4.15 million, marking a 6.1% year-over-year gain, according to the National Association of Realtors. The median home price rose 4.7% year-over-year to $406,100, with all regions reporting price growth. Housing inventory totaled 1.33 million units, down 2.9% from October 2024 but up 17.7% from the prior year, representing a 3.8-month supply at the current sales pace. First-time buyers accounted for 30% of transactions, while cash sales fell to 25% and distressed sales remained stable at 2%. Regional sales were strongest in the Northeast, up 8.5% from October 2024, while the West reported no monthly change but a 14.9% year-over-year increase.2
Jobless Claims Drop, GDP Revised: U.S. jobless claims fell by 22,000 to 220,000 last week, reversing prior increases and indicating a gradual labor market slowdown. Third-quarter GDP growth was revised up to 3.1%, driven by robust consumer spending and stronger-than-expected business investments. Consumer spending rose at a 3.7% annualized rate, marking the fastest pace in 1.5 years, while labor market resilience continued to support economic expansion. The Federal Reserve delivered a rate cut this week but projected fewer reductions in 2025, citing sustained economic strength and elevated inflation risks.3
Fed’s 2025 Voters Shift Hawkish: The Federal Reserve’s 2025 rate-setting panel will include more hawkish members, potentially increasing dissent on further rate cuts. Cleveland Fed President Beth Hammack dissented on last week’s 0.25% rate cut and will be replaced by the more dovish Austan Goolsbee, while St. Louis Fed President Alberto Musalem and Kansas City Fed President Jeffrey Schmid, both leaning hawkish, will join the panel. Fed Chair Jerome Powell signaled caution on additional rate cuts, emphasizing inflation progress as a key factor. Updated projections suggest two cuts in 2025, but disagreement may grow if the labor market weakens faster than inflation declines. Analysts expect Powell to maintain influence over final policy decisions.4
U.S. Equity Funds See Exodus: U.S. equity funds saw net outflows of $50.2 billion in the week ending December 18, 2024, the largest since September 2009, as investors took profits ahead of the Federal Reserve’s rate decision. Large-cap funds led the withdrawals at $20.93 billion, while small-cap, multi-cap, and mid-cap funds also faced significant outflows. Sector funds recorded $1.53 billion in net sales, with technology and healthcare leading the declines, though financial sector funds attracted $578 million in inflows. U.S. debt funds saw $2.1 billion in net outflows, led by government bond funds, while taxable fixed income and loan participation funds received modest inflows. Money market funds reported a $28.07 billion outflow, continuing recent volatility.5
Space Economy Poised for Growth: The commercial space sector is projected to expand rapidly in 2025, driven by advances in satellite technology and declining launch costs. Key growth areas include satellite-based internet services, space tourism, and resource extraction from asteroids and the Moon. Companies are investing heavily in satellite manufacturing, launch services, and space infrastructure to capitalize on these opportunities. The potential for asteroid mining and lunar exploration has attracted significant interest as a source of valuable materials. This reflects growing recognition of space as a key frontier for global economic development, per
.6Precision Medicine Drives HealthTech Boom: The healthcare sector is transforming through precision medicine, powered by breakthroughs in genomics and AI-driven drug discovery. Telemedicine and wearable technologies are becoming integral, enabling real-time monitoring and personalized care. These innovations aim to improve health outcomes while reducing costs and expanding access. Biotech firms, telehealth platforms, and AI-focused startups are leading investment opportunities in this space. The integration of advanced technologies is reshaping healthcare delivery and operational efficiency, per
.7Microsoft Leads Nvidia AI Chip Orders: Microsoft purchased 485,000 Nvidia Hopper chips in 2024, far outpacing rivals like Meta, Amazon, and Google, as it aggressively builds AI infrastructure for its Azure cloud and OpenAI partnership. ByteDance and Tencent also emerged as major buyers, though U.S. export controls limited their access to advanced models. Big Tech companies, facing Nvidia’s dominance, are deploying custom AI chips, with Google and Meta each installing around 1.5 million of their own processors this year. Despite Nvidia’s market leadership, AMD and in-house chips from companies like Amazon are gaining traction. Global server spending is projected to reach $229 billion in 2024, with Microsoft leading at $31 billion in capital expenditure.8
Amazon, Starbucks Workers Strike Nationwide: Starbucks and Amazon workers launched strikes across multiple U.S. cities, demanding progress on labor contracts and improved wages and conditions. Starbucks Workers United reported picket lines at dozens of stores, citing stalled negotiations and insufficient wage proposals, while the Teamsters union organized strikes at Amazon delivery hubs over the company’s refusal to recognize drivers as employees. The strikes come amid a broader wave of post-pandemic union activity, with workers at both companies still seeking their first labor agreements. The National Labor Relations Board, under the Biden administration, has backed some union claims but faces challenges as a Republican-led board is expected under President-elect Donald Trump. Strikes during the holiday season aim to increase public and economic pressure on the companies.9
U.S. Politics and Geopolitics
Congress Avoids Shutdown, Defies Trump: Congress passed a bipartisan funding bill to avert a government shutdown, rejecting President-elect Donald Trump’s demand to address the debt ceiling immediately. The package funds federal operations through March 14, 2025, and includes $100 billion in disaster aid, but defers debt limit negotiations to 2025. The House passed the bill 366-34, while the Senate approved it 85-11, ending weeks of tension and halting shutdown preparations. Trump’s push for a long-term debt ceiling hike highlighted divisions within the GOP, forcing House Speaker Mike Johnson to rely on Democratic support for the bill’s passage. The incoming Trump administration faces early challenges in uniting Congress on spending and tax priorities.10
Willis Removed From Trump Case: A Georgia appeals court disqualified Fulton County District Attorney Fani Willis from prosecuting Donald Trump in the state’s election interference case, citing an “appearance of impropriety” due to her past relationship with special prosecutor Nathan Wade. The ruling requires the case to be reassigned, though Willis has filed for a Georgia Supreme Court review. Trump hailed the decision as ending what he called a “politically motivated” case, while his attorney praised the court’s reasoning. The case, which charges Trump and 18 others with racketeering over alleged attempts to overturn Georgia’s 2020 election results, faces further delays as a new prosecutor must be appointed. The disqualification follows months of controversy surrounding Willis and Wade’s relationship and its perceived impact on the case’s integrity.11
Taiwan Risks Peak by 2031: Chinese leader Xi Jinping faces a narrowing window to attempt a Taiwan invasion, with analysts identifying 2029-2031 as the highest-risk period. The PLA’s readiness goal for 2027 is slipping, as Xi prioritizes loyalty over combat preparedness, following purges in the officer corps. U.S. deterrence remains insufficiently credible, with limited military presence around Taiwan allowing Beijing to erode operational capabilities. The Sino-American rivalry reflects systemic miscalculations on both sides, with U.S. leaders overestimating CCP weakness and Beijing misjudging U.S. resilience. History suggests prolonged and inconclusive struggles are likely, requiring both nations to rethink their strategies for a decades-long competition, per
.12
Ibid.
