The Federal Reserve, which meets next week for the first time in 2026, cut its interest rates three times in three meetings late last year.
This relaxation, which tends to boost the economy by making credit cheaper, was motivated by signs of exhaustion in the labor market, with practically anemic job creation.
Two governors of the monetary entity opposed the latest reduction. And others have since made clear that they would prefer to keep rates unchanged at the next meeting, despite strong pressure from President Donald Trump for a cut.
Investors are now almost certain that the status quo will prevail on January 28 when the Fed meets, according to the CME FedWatch tracking tool.
Little savings
In this context, consumer spending remained solid, even increasing by 0.5% in both October and November in the monthly comparison. Some analysts warn, however, that the foundations for this increase could be weak.
If the most volatile prices of food and energy are excluded, the so-called “core” inflation was 2.7% in October and 2.8% in November, in both cases at 12 months.
Pantheon Macroeconomics analysts expect inflation to nevertheless remain below what Fed officials anticipate.
This is due to “the relatively low level of tariff revenue, little momentum in new rentals and signs that the (pace of) wage growth could slow further,” Pantheon economists Samuel Tombs and Oliver Allen said in a research note.
Despite “surprisingly resilient” consumer spending, this strong growth “seems built on increasingly weak foundations.”
Among other factors, such as real after-tax income, Tombs and Allen note that the “personal savings rate now appears unsustainably low.”
Thursday’s report showed that the personal savings rate – which measures savings as a percentage of disposable income – was 3.7% in October and 3.5% in November in the United States.
