US Macroeconomic Report - December 2024

In December, year-over-year inflation rose by 0.16%, while core inflation increased marginally by 0.02%. These upticks were primarily driven by higher costs in the food and shelter sectors. Despite these inflationary pressures, short-term interest rates experienced a slight decline of 2 basis points month-over-month, settling at 4.25%.

Since the US elections, there has been a significant upward movement in both long-term and short-term interest rates, increasing by 66 and 65 basis points respectively. Notably, long-term interest rates saw a substantial year-over-year rise of 0.45%, whereas short-term rates decreased by 0.19%. This divergence suggests that the market is starting to incorporate expectations of higher long-term inflation with a slightly hawkish FED, resulting in an added term premium.

Additionally, economic growth was revised upward by 0.06%, reaching a rate of 2.72%. This revision underscores the current strength of the US economy, however, the unemployment rate has been ticking higher this year. If this trend continues, we expect the US economy to slow down considerably.

Indicator Analysis:

This month, our U.S. economic cycle composite indicator increased, however, given its current momentum, we believe it still indicating conditions characteristic of an economic cycle peak deceleration.

Currently, our US Economic Cycle Indicator shows that 57% of macroeconomic indicators suggest the economy is in a cycle top, with no indicators pointing to a cycle bottom and 43% remaining neutral. 

Month-over-month, household indicators increased by 3.77%, indicating stronger consumer activity, while the labour market declined by 0.97%, signalling cooling of the labour market. 

On a year-over-year basis, sentiment improved significantly by 11.55%, reflecting increased consumer and business confidence, whereas the labour market deteriorated by 7.30%. However, this deterioration stems from previously very high levels, suggesting a normalization rather than a fundamental weakening.

Read the Full Report:

The full report is available for download at the bottom of this page. Inside, you’ll find a comprehensive breakdown of each component contributing to our macroeconomic indicators, providing detailed insights into the factors driving current economic conditions.