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Hey friend - Make sure to catch up with our Weekly Scoop, and don’t miss our Explained about whether Big Tech is a climate villain.
Here’s what you need to know today…
Big Picture
Rising costs haven’t slowed consumer spending.
Americans’ incomes aren’t keeping up with rising expenses.
The US manufacturing industry is still struggling.
Check out more newsletter recommendations from Beehiiv:
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The Market: ⬆️ +1.2%
S&P 500: 4,166.82
1Mo: -3% | 1Yr: +8% | 5Yr: +53%
The market jumped today as investors took a break from the marathon of negativity that has driven the market lower for three straight months.
Rising living costs haven’t slowed consumer spending. The Commerce Department reported Friday that the cost of living keeps rising faster than policymakers would like to see. The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, rose 0.3% in September. Overall, most things we spend money on are 3.4% more expensive than they were a year ago. Spending, though, hasn’t slowed down. Even adjusted for inflation, consumers spent 0.4% more in September, compared to a 0.1% rise in August. Investors worry persistent inflation may force policymakers to keep restricting business activity. [🤓]
Our incomes aren’t keeping up with the cost of living. The Commerce Department revealed that Americans’ disposable income declined for the third straight month compared to rising living expenses. Americans saved less as a result of continued spending and shrinking incomes.
The US manufacturing sector has been struggling for months. The Dallas Federal Reserve’s Manufacturing Survey reported decreased factory activity in October and fewer new orders. This is the 18th consecutive month of contracting business activity. Surveys from the New York region shared many of the same sentiments. Things in Philadelphia got slightly less negative this month, but they were negative nonetheless.
How are you feeling about the economy? |
Company Scoops 🗣️🌎💰
đź’ˇAct like a boardmember and judge how companies behave. Engaging helps build your financial confidence and hold corporations accountable.
 Abercrombie & Fitch | CEO Sex Crimes Abercrombie & Fitch is facing a lawsuit alleging that it ignored misconduct by ex-CEO Mike Jeffries involving sex trafficking and sexual abuse affecting more than 100 victims. The retailer has launched its own investigations. |
 General Motors | Landmark Deal GM reached a tentative agreement to end a six-week worker strike following deals from Ford and Stellantis that included significant wage increases, cost-of-living raises, and more attainable promotions. The strike cost GM $800M in lost production. |
 Southwest Airlines | Worker Win Southwest Airlines reached an agreement with nearly 19,000 flight attendants seeking better pay and improved working conditions. Southwest has struggled with staffing shortages, but flight attendants haven't received a raise in four years. |
 McDonald's | Pricier Burgers McDonald's keeps boosting overall revenue through higher menu prices, even as it deters more restaurant visitors. The fast food chain has raised menu prices by 10% in 2023 and expects to raise prices further to meet higher wage costs. |
 Exxon Mobil | Cash to Spend Exxon Mobil notched bigger profits again this quarter from higher oil prices, though nowhere near last year's record profits. The cash-flush oil giant just bought a massive oil company and increased its dividend cash payouts to shareholders. |
(These links only work for 24 hours while the story is live.)
Inside Scoop 🤓
How do policymakers try to control inflation?
The Federal Reserve, aka the Central Bank, aka The Fed, is in charge of our whole money system. When the economy is struggling, the Fed lowers baseline interest rates to make it cheaper for consumers and businesses to borrow and spend (lower rates on business loans, mortgages, credit cards, car leases, etc.)
The Fed also pumps more money into the system by buying bonds with new dollars that it essentially speaks into existence. The additional cash keeps the pipes flowing as the borrowing and spending heats up, stimulating economic activity.
Once the economy's strong enough to stand on its own, the Fed starts to raise interest rates and pull back some of that money to ensure the economy doesn't overheat. Inflation is the Fed's heat gauge. The gauge was reading very hot but has been cooling lately.
So everyone's watching how long the Fed will keep restricting the economy with high rates if inflation keeps cooling. The Fed hopes to get living costs under control without sparking mass unemployment.
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