The final release of the GDP figures are the last large releases of the year before moving into Q1 of 2024, with the GDP report showing the economy had shown growth — particularly in Q3 with it tapering off by the end of the year. While the growth had been strong, it still was less than expected by analysts, however the final numbers do indicate we are on a track for a soft-landing and with the potential to all-together avoid a potential recession. The only other reports of note were the Personal Spending and PCE Index Prices.
GDP 2023 (Final)
The U.S. economy expanded at a revised 4.9% annual pace in the third quarter, a surprising burst of growth that appears to have tapered off at year’s end.
Growth of gross domestic product, the official scorecard for the economy, was reduced from a previously reported 5.2% in the government’s third estimate. It was still the biggest increase in GDP in a decade, however, excluding the pandemic years of 2020-21.
Personal Income and Spending
In November, consumer spending experienced a slight increase of 0.2%, indicating a somewhat tempered growth in the U.S. economy. The trend of subdued spending was also observed in October. On a positive note, incomes saw a rise of 0.4% during the same period. This increase in income is noteworthy as it now outpaces inflation.
PCE Index
In November, the U.S. inflation rate, as measured by the Federal Reserve’s preferred PCE index, registered a decline for the first time since 2020, signaling a continued easing of price pressures. The year-over-year inflation growth also decelerated, dropping to 2.6% from the previous month’s 2.9%, marking the lowest level since February 2021.
Primary Mortgage Market Survey Index
- 15-Yr FRM rates saw a decrease by -0.43% with the current rate at 5.95%.
- 30-Yr FRM rates saw a decrease by -0.28% with the current rate at 6.67%
MND Rate Index
- 30-Yr FHA rates saw a -0.02% decrease for this week. Current rates at 6.12%
- 30-Yr VA rates saw a -0.02% decrease for this week. Current rates at 6.13%
Jobless Claims
Initial Claims have decreased to 206,000 in comparison to the expected claims of 218,000. The prior week number was 203,000.
What’s Ahead
With New Year’s on the horizon, the only notable release will be the regularly scheduled Jobless Claims release.
With both CPI and PPI reports well within expectations, there is a favorable reception across the broader market spectrum that these reports are a strong sign that the Federal Reverse will begin rate cuts in 2024. A soft landing for the economy is the primary goal of the Federal Reserve, and it would seem their measures have had the intended impact with the Jobless claims seeing a recent new low and many of the primary economic signals pointing to a stable 2024.
This will be another light week before the next large releases of the CPI and PPI data. The overall unemployment numbers have been trending lower which will likely leave the Federal Reserve board in a state of suspension. They have made many assertive statements they do not intend to cut rates soon, but the signs of a soft landing for the economy are numerous, leading to much speculation about impending rate cuts. As a general indicator, lending partners have seen a near 6 week-to-week decline in lending rates. The largest data releases this week are the U.S. Unemployment Reports and Non-Farm Payroll data releases.
The first week of December’s largest reports are the GDP estimates, which will be the second estimations of the year prior to the final release. The final GDP reports will be after the new year and
There will be a very light week with the Holiday season approaching. The only notable reports to have come out for the week are the U.S. economic leading indicators, with nothing scheduled around Thanksgiving weekend. The median forecast for the leading indicators has shown that with the rest of the CPI and PPI data among other economic statistics, the economy does seem to be heading towards a soft landing as the Federal Reserve had initially targeted. The most notable changes are lending partners cutting rates with the potential for shifting economic policies and rate cuts in the future.
With the release of the CPI and PPI data, much of the broader market has been anticipating the potential cooling of inflation numbers month-to-month and those expectations have been met. There’s a consistent trend of inflation slowing down which brings a greater potential for the end of any rate hikes from the Federal Reserve, signaling a soft-landing for the economy which has been touted by Jerome Powell. With a soft landing, it does also signal a strong potential for the Federal Reserve to begin lowering rates in the coming future. 
The week following the FOMC rate decision meetings are typically very light, with the two most influential releases being the University of Michigan Consumer Sentiment and the weekly Job Claims reports. The more positive news is mortgage lending rates have been on the decline in the last two weeks.
The most important data of the quarter was released, signaling the direction for many markets and where economic policy may be headed. Jerome Powell as well as other members of the Federal Reserve spoke about the state of economic policy, informing many parties about their decisions to remain hawkish or dovish in their approach. Further rate hikes could tell a story that inflation is not yet under control and the Federal Reserve feels the need to continue these rate hikes, which will have a significant impact on the lending markets as a whole.
This week’s most significant data offered preliminary numbers for manufacturing and services PMI (Purchasing Managers Index). Both can serve as a forward indicator for the economy while providing insight into the current state of the cost of living for the service industry. While manufacturing met an expected rise for the end of October, services saw a contraction, falling to 46.6 from 49.3. Readings below 50.0 can be a sign of a downturn for the economy, particularly given the time of the year.