Saturday, 22 December 2012

US economy accelerates, stocks fall

The US economy accelerated in November, with the Chicago Federal Reserve reporting that its national activity Index increased to +0.10 in November from -0.64 in October. The three-month moving average increased to -0.20 in November from -0.59 in October.

Other US data on Friday were mostly also positive.

Consumer spending rose 0.4 percent in November after having fallen 0.1 percent in October. After adjusting for inflation, consumer spending rose 0.6 percent, the largest increase since August 2009.

Personal income rose 0.6 percent in November, the most since February, after a 0.1 percent increase the prior month.

Another report on Friday showed that durable goods orders rose 0.7 percent in November. Orders for non-defense capital goods excluding aircraft rose 2.7 percent after a revised 3.2 percent gain in October.

However, the Thomson Reuters/University of Michigan consumer sentiment index fell to 72.9 in December, the weakest since July, from 82.7 in November. Bill McBride thinks that the decline in sentiment is probably related to concerns over the so-called “fiscal cliff”.

Indeed, concerns over the budget pushed stocks down on Friday after House Republican leaders scrapped a plan to allow higher taxes on top earners. The Standard Poor’s 500 Index fell 0.9 percent and the MSCI All-Country World Index fell 0.8 percent.

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