Where we landed on the economy: positive signs, negative vibes

Hard takeoff, soft landing… The US economy has spent the year finding its sea legs. In July, price-weary consumers celebrated inflation falling below 3% for the first time since March 2021. In September, they cheered the Fed’s first rate cut in four years. Rates were cut again in November, and an expected final trim for the year is due Wednesday. As the cuts came, inflation closed in on the Fed’s 2% target, dropping to as low as 2.4% in September before climbing to 2.7% last month. Unemployment ticked up — though still historically low — and November marked the sixth straight month in which unemployment eclipsed 4%.

The US has added about 186K jobs/month, on average, and hourly wages have risen an average of 4% for the year. While a lot of metrics pointed to a strong economy (growing GDP, jobs, and household wealth), Americans’ vibes stayed pretty bleak. Consumer sentiment started the year at 79 points (below the historical average) and dropped in July to 66. Since then, it’s gone up for five straight months, ending the year at 74.