The US Economic Cool-Down Is Already Under Way

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The slowdown finally looks to be occurring. The latest reading of the Atlanta Fed’s widely-watched economy tracker shows growth decelerating to a 1.2% annual pace in the fourth quarter, from a blockbuster 5.2% in the third, as consumers and companies feel the pinch from higher interest rates.

Now the question is what comes next. November employment data, due out Friday, are expected to be inconclusive. Unemployment probably held steady at 3.9% last month while payroll growth wasn’t all that different from October’s, after taking account of the now-ended auto workers’ strike, according to economists’ projections.

US Job Growth Has Been Moderating

November payrolls seen getting a boost from end of autoworkers’ strike

Investors, at least for now, are casting their vote for a benign slowdown in which inflation falls without the economy contracting — the elusive soft landing. In what’s been dubbed the “everything rally,” they’ve bid up prices on stocks, bonds and bitcoin. And they’re betting the Fed will help things along by reducing interest rates as soon as March.

Anna Wong, formerly of the Fed and now chief US economist for Bloomberg Economics, agrees the first rate cut will occur in March. But, in contrast to investors’ rosy outlook, she says the reduction will come too late to prevent a recession that will push unemployment toward 5% by the end of 2024.

President Joe Biden has a lot at stake in who’s got it right ahead of the November election. Amid all the chatter about polls, debates and campaign spending, “behind the scenes is what really matters, namely how good or bad the economy will be,” said Yale University professor Ray Fair.

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A former US diplomat was charged with spying for Cuba’s intelligence service while holding top posts in embassies across Latin America and at the White House.

Victor Manuel Rocha
Victor Manuel Rocha was charged in a federal complaint

The White House budget director warned that the US would run completely out of resources to assist Ukraine by the end of the calendar year, as Congress remains at an impasse.

Democrats’ dreams of imposing a wealth tax on the richest Americans risk being snuffed out by the US Supreme Court in a dispute over a $14,729 levy that puts the justices in the middle of a partisan tax and budget battle.

The high court signaled a likely divide over Purdue Pharma’s $6 billion opioid settlement, as the justices weighed administration contentions that it improperly shields the Sackler family members who own the company.

The Internal Revenue Service crime unit that played a leading role in the Binance Holdings Ltd. probe is seeing a surge in cases involving crypto-related tax evasion.

Officials at the Fed and the Federal Deposit Insurance Corp. are struggling to hire bank examiners and retain veteran employees just as the regulators are proposing a raft of new rules.

North Dakota Governor Doug Burgum is suspending his presidential campaign, ending a long-shot bid for the Republican nomination that outlasted some bigger-name rivals.

Watch & Listen

Today on Bloomberg Television’s Balance of Power at 5 p.m, hosts Annmarie Hordern and Joe Mathieu interview former US Ambassador James Jeffrey about the Israel-Hamas war. Earlier on Bloomberg Surveillance, Deputy Energy Secretary David Turk said the US is taking advantage of low prices to refill its strategic reserve as much as it can.

On the Big Take podcast, Bloomberg’s Olivia Carville and Margi Murphy describe the fallout when deepfake creators use AI to create pornography by altering images and videos of real people, and why there’s nothing illegal about doing so under federal law. Listen on iHeartApple Podcasts and Spotify.

What’s Next

The Bureau of Labor Statistics releases data on job openings for October at 10 a.m. tomorrow.

The presidents of Harvard, Penn and MIT will be questioned Tuesday about antisemitism on their campuses by the House Education and Workforce Committee.

The top executives of major US banks are set to testify in front of the Senate Banking Committee starting at 9:30 a.m. Wednesday.

The fourth Republican presidential primary debate is set for Wednesday in Tuscaloosa, Alabama.

The US unemployment rate for November will be released by the Bureau of Labor Statistics at 8:30 a.m. Friday.

The United Nations Climate Change Conference, known as COP28, continues through Dec. 12 in Dubai.

The Senate Judiciary Committee holds a hearing on online child sexual exploitation with testimony from tech company executives Jan. 31.

Source : Bloomberg