November's inflation was lower than expected amid the fastest-rising consumer prices in decades. The CPI growth for November was the smallest 12-month increase since December 2021, and it was down from 7.7% in October (actual 7.1% expected 7.3%).
Are we finally seeing an end to the inflation runaway?
https://ycharts.com/indicators/us_inflation_rate
There's 3 other important indicators to consider:
Personal Consumption Expenditures Price Index
Personal spending rose by 5.54% on an annual basis, a sharp slowdown from 6.08% in October. It is worth noting that personal income in the United States has increased yet again by 0.4% (from 0.7% in October, above market expectation of a 0.3% gain). This means that most residents in the United States have stronger spending power.
https://ycharts.com/indicators/us_pce_price_index_yoy
US Index of Consumer Sentiment
Consumer confidence historically falls during recessionary periods, and rises during expansionary ones. Compared to November 2022, it increased by 5.11% and declined by 15.44% from December 2021.
https://ycharts.com/indicators/us_consumer_sentiment_index
Unemployment Rate
The labor market still remains strong with the unemployment rate at 3.7% as of November 2022. The Bureau of Labor Statistics reports 263,000 new jobs in November 2022, a 7.3% decline.
https://ycharts.com/indicators/us_unemployment_rate
Overview
While the U.S. is experiencing a technical recession with two consecutive quarters of negative GDP, Q3 saw positive growth.
The U.S. economy has shown remarkable resilience despite the high inflation caused by an imbalance of supply and demand.
In his speech, Fed chairman Jerome Powell said the central bank will continue raising interest rates until inflation reaches its target of 2%.
In the past few years, geopolitical conflicts and COVID-19 have weakened the foundations of the market. It is likely that the bearish momentum will continue in 2023. It will persist as a delicate dance between inflation rates and interest rates unless the market fundamentals improve.
Captured on 25 Dec 2022
With my current strategy, I use dividend-paying funds to diversify my portfolio in order to target capital growth and passive income. It allows me to take advantage of the tax-free flexibility that mutual funds offer, even throughout bear markets.
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Disclaimer: This is just my personal opinion, and should not be taken as financial advice. It's important to always do your own research before making any investment decisions.
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