December’s US inflation rate rose to 2.9%, driven largely by a 40%+ surge in energy prices and a staggering 36%+ increase in egg prices due to avian flu. However, core inflation remained lower than anticipated at 3.2%, easing concerns of a renewed inflation wave. This relatively positive data, contrasting with strong job growth, created uncertainty regarding future Federal Reserve interest rate cuts. Market reactions were initially positive, but anxieties persist about potential inflationary pressures from upcoming policy changes.
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The Federal Reserve’s announcement of fewer-than-expected interest rate cuts in 2025 triggered a significant market downturn, with the S&P 500 experiencing one of its worst days of the year, falling 2.9%. This decision, driven by a robust job market and rising inflation, contrasts with earlier projections of more substantial cuts. The resulting increase in Treasury yields negatively impacted stocks, particularly those of smaller companies heavily reliant on borrowing. The shift reflects the Fed’s cautious approach amid economic uncertainties, including those potentially stemming from the incoming administration’s policies.
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Tesla and SpaceX CEO Elon Musk, a vocal supporter of President-elect Donald Trump, has endorsed the idea of allowing presidents to influence Federal Reserve policy, reflecting a growing pressure campaign against the central bank’s independence. This follows President-elect Trump’s repeated calls during his campaign to have a say in Fed policy, a departure from the traditional practice of maintaining the Fed’s autonomy to focus solely on the economic health of the United States. Musk’s agreement with Senator Mike Lee’s call to “#EndtheFed” suggests a potential shift in the relationship between the White House and the Federal Reserve under the new administration, echoing the contentious relationship that existed during Trump’s first term.
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Federal Reserve Chair Jerome Powell has stated he will not resign from his position, even if asked to do so by President-Elect Donald Trump. This declaration came during a press conference following a meeting of the Federal Reserve, where a reporter pointed out that some of Trump’s advisors have suggested Powell should step down. Powell’s firm “No” response to this question was followed by a clarification that he does not believe he is legally obligated to resign.
Further inquiries from journalists focused on the President’s authority to dismiss or demote Powell. The Fed Chair definitively stated that such actions are “not permitted under the law”.… Continue reading
The Federal Reserve’s recent decision to cut interest rates has sparked a wave of commentary, much of it focused on the timing of the announcement, just days after Donald Trump’s election victory. Many believe the headline is misleading, suggesting a connection between the two events that simply doesn’t exist.
The truth is, the Fed’s rate cut was anticipated and planned for months, long before the election. The decision was based on economic indicators and projections, not on the outcome of a political race. The rate cut was a pre-determined action, and it would have happened regardless of who won the election.… Continue reading
Trump’s first broken promise will be his promise of 3% mortgage rates. It’s a promise that simply can’t be kept, no matter how much he wants to. Getting interest rates down to 3% would require the Federal Reserve to purchase trillions of dollars in debt, which is unlikely to happen. The Fed is an independent entity, and the government doesn’t have the power to tell them what to do. The only way the government could influence interest rates is by balancing the budget, raising taxes, and cutting spending, which is not something his supporters would be happy about.
There’s a good chance that his supporters will begin to scapegoat certain demographics, like migrants, and ramp up the culture war to distract from his broken promises.… Continue reading
The personal consumption expenditures (PCE) price index, a key indicator of US inflation, rose by 2.1% in September, down from 2.2% in August. This is the lowest level since 2021 and is seen as a success for the Federal Reserve, which was aiming to reduce inflation to 2%. In a move from its previous stance that price growth would be “transitory”, the Federal Reserve raised interest rates to a 20-year high before beginning to cut them again in September. Despite this positive development, the high cost of living continues to be a hot topic ahead of the US presidential election. Furthermore, almost half of US citizens surveyed in a recent poll wrongly believe that the country is in recession.
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The Federal Reserve’s recent significant cut in its key rate is making waves, not just in the economy but also in the minds of regular citizens like me. It signifies a shift in focus from fighting inflation to prioritizing economic growth, and the implications of this move are far-reaching.
The timing of this rate cut, just weeks before a pivotal presidential election, introduces an interesting dynamic. It could potentially influence economic conditions as Americans head to the polls, with varying interpretations from different political camps. However, the tangible impact comes in the form of lower borrowing costs for mortgages, auto loans, and credit cards.… Continue reading
The US economy added an impressive 353,000 jobs in January, marking a strong start to 2024. As I scroll through Reddit posts, I see many people expressing frustration and uncertainty about finding employment. However, it is important to dig deeper into the sectors that are experiencing significant growth.
One key sector that is contributing to the job surge is healthcare, with approximately 33% of the added jobs in this field. As someone who works in hospice care, I can attest to the constant need for healthcare professionals. In fact, I receive job offers almost every week, highlighting the high demand in this sector.… Continue reading
As a casual observer of the financial world, I have been closely following the recent signals from the Federal Reserve regarding interest rate cuts. It seems that many people were anticipating a decrease in rates due to the previous hike, but I believe this assumption was unfounded. The Fed is not going to lower rates just because businesses are dissatisfied; they will do so if they see a need based on the overall state of the economy.
Currently, the economy is still growing, consumers are spending, and unemployment remains low. Despite the interest rate being at 5% or higher, there haven’t been any significant negative effects on the economy.… Continue reading
John Q. Hosedrinker 
Matt Underwood