Monthly Economic Headlines

December 11, 2024

December economic headlines

Political uncertainty rises.

President Trump’s reelection creates market uncertainty. While most expect he’ll pursue pro-growth policies such as deregulation and lower taxes, many businesses are concerned about the wide application of tariffs. Uncertainty around trade policy could impact economic growth as businesses take a ‘wait and see’ approach. See Spotlight for more on tariffs.

Yields on short- and long-dated treasuries diverge.

Yields on 10-year treasuries increased throughout much of November despite the Federal Reserve (Fed) cutting the federal funds rate. While this dynamic likely resulted from improved sentiment following President Trump’s reelection, elevated inflation expectations and shifting supply / demand dynamics for U.S. Treasuries may eventually decrease the correlation between short- and long-dated maturities.

Consumers continue to spend.

Inflation-adjusted retail sales are holding flat despite multiple years of high inflation. Many attribute this to wage increases and a strong labor market. However, credit card debt is rising and this may suggest: 1) consumers are financially stressed and are increasing debt to get by; 2) consumers are feeling confident about the future or; 3) some consumers are struggling while others feel confident.

Inflation pressures linger.

Inflation picked up in October as seen in the Consumer Price Index (CPI, 2.6% year over year), Core-CPI (3.3%), Personal Consumption Expenditures (PCE, 2.3%) and Core-PCE (2.8%). Persistently high inflation readings decrease the likelihood of additional interest rate cuts by the Fed.

Inflation indices

Source: U.S. Bureau of Labor Statistics. Core: less energy and food.

Data and trends

This section presents select economic indicators to help producers gauge the direction of their business. These metrics reflect current market dynamics and their potential impact on operations. Come back each month to stay informed and adapt swiftly to the ever-changing economic landscape.

WTI crude oil and diesel prices

Source: U.S. Energy Information Agency.

Observation: Markets appear to be in a holding pattern as they digest risks from volatile geopolitical conditions, elections in the U.S. and mixed economic data. Supply and demand conditions appear relatively in balance.

About this indicator: The West Texas Intermediate (WTI) crude oil price is a benchmark for oil pricing and influences the cost of fuels like diesel, which is essential for running farm equipment and transporting goods.

Transportation price indices

Source: Bloomberg. Freightos. U.S. Bureau of Labor Statistics.

Observation: Container shipping costs held at relatively strong levels in November as buyers prepare for tariffs, continue to endure disruptions in the Red Sea and environmental regulations that lengthen shipping times, and intra-Asia trade picks up. Bulk prices and trucking costs fell moderately on weak demand.

About this indicator: The long-haul trucking index measures the changes in trucking freight rates over time. The Baltic Dry Index measures the average global cost of shipping bulk materials, including grains, sugar, metals, and others. The container index measures the average global cost of shipping containers. Shipping prices vary by route and carrier size based on market dynamics and may move independently from global averages (i.e. the cost to ship goods from the West Coast to Asia could remain flat even if global rates are increasing).

DXY Index

Source: Bloomberg.

Observation: The dollar strengthened slightly as the reelection of President Trump is generally considered bullish for the U.S. economy.

About this indicator: The DXY index measures the strength of the U.S. dollar against a basket of foreign currencies. The strength of the U.S. dollar impacts the competitiveness of agriculture producers in foreign markets. As the dollar strengthens, U.S. producers become less competitive, and vice versa.

Consumer Sentiment Index

Source: University of Michigan.

Observation: On average consumer sentiment improved slightly in November, but a closer look at the numbers reveals sentiment among Republicans spiked following the elections while it dropped sharply for Democrats.

About this indicator: The University of Michigan’s Consumer Sentiment Survey provides insight into how people view their economic prospects. An increasing value means people are feeling better about the economy and are more likely to spend on consumer goods and services. Higher spending generally translates to stronger economic growth.

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