Jan 10

Trending Topics and Macroeconomic Indicators – December 2022

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Following is the executive summary of the trending topics and key reports on the US macroeconomic indicators published in December 2022.

US Macroeconomic Indicators:

Fed Raised Interest Rates Half a Point to Highest Level in 15 Years

 The U.S. Federal Reserve raised its key interest rate this year for the seventh time, signaling more hikes. The rate-setting Federal Open Market Committee (FOMC) increased the overnight borrowing rate by half a percentage point, taking it to a targeted range between 4.25% and 4.5%. 

Labor Market Strong 

The U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 223,000 in December, and the unemployment rate edged down to 3.5 percent.

The number of Americans filing new claims for jobless benefits dropped to a three-month low last week. At the same time, layoffs fell 43% in December, pointing to a still-tight labor market that could force the Federal Reserve to keep hiking interest rates. The gains occurred in leisure, hospitality, health care, construction, and social assistance.

Service Sector Contracted After 30 Consecutive Months

Economic activity in the services sector contracted in December after 30 consecutive months of growth — with the Services PMI® registering 49.6 percent — say the nation’s purchasing and supply executives in the latest Services ISM Report On Business. The  Services Purchasing Managers’ Index (PMI) fell from 56.5 percent in November to 49.6 percent in December. A reading of 50 or higher signals growth.

Manufacturing Contracted for the Second Month.

According to the latest  Manufacturing ISM Report On Business®, “The December Manufacturing PMI® registered 48.4 percent, 0.6 percentage points lower than the 49 percent recorded in November.” The two manufacturing industries that reported growth in December are Primary Metals; and Petroleum & Coal Products.

Existing Home Sales Down

  • According to a National Association of Realtors ® – November 2022 report, existing-home sales fell for the tenth month in a row in November 2022, with all regions of the U.S. recording month-over-month and year-over-year declines.
  • Sales of new homes rose 5.8% in November from October but were down 15.3% from a year ago, according to a joint report from the US Department of Housing and Urban Development and the US Census Bureau. 

Retail Sales Were Up

According to Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment, U.S. retail sales excluding automotive were up +8.1% year-over-year in November. E-commerce sales were up +5.9% YOY, while in-store sales were up +8.6% YOY.

Trending Topics:

  • ChatGPT
    • ChatGPT is creating a lot of excitement on the internet and is making headlines for its astonishing capabilities. The new AI bot ChatGPT (Generative Pre-Trained Transformer 3) released by OpenAI is a type of language generation model designed for generating human-like text in a conversational style.
    • The striking thing about ChatGPT is it can expertly answer your questions, write relevant content – a useful writing assistant, and code computer programs. According to OpenAI, ChatGPT can “answer follow-up questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests.”
    • Google issued a “Code Red” amid the launch of ChatGPT, being concerned about the future of the Google search engine. It hesitates to release its AI chatbot LaMDA (Language Model for Dialogue Applications)  because it’s a “reputational risk.” According to Google, the problem with chatbots is that they’re often wrong yet present their answers with undeserved confidence. Hence LaMDA is still in research mode.
    • Microsoft is reportedly integrating ChatGPT3 AI with Bing search. Microsoft invested $1 billion in OpenAI in 2019 and could launch a ChatGPT-backed version of Bing before the end of March. The feature could make Bing more competitive with Google’s search engine.
  • Layoffs Continue
    • An analysis of the Intellizence Layoff Dataset indicates companies continued to announce layoffs in December 2022, although the pace slowed down compared to November 2022. The companies could be holding the announcement due to the holiday season. We noticed an increase in layoffs in the first week of January 2023.
    • In December, 160+ companies announced the termination of 20,000+ employees.  Major layoff announcements – Morgan Stanley(1600), Stellantis (1350), and SeniorBridge (1005).

Read More – Top Macro Economic Trends & Indicators – November 2022

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