Markets, economy surprised investors
NEW YORK – In a year full of big numbers, with strong gains for stocks and even more fantastic flights for crypto, it was one shrinking number that superseded all.
Inflation, the scourge of the global economy, moderated this year. It’s still relatively high, particularly after the many years of low inflation that everyone enjoyed before U.S. inflation topped 9% two summers ago. But it’s cooled enough to get investors looking ahead to a 2024 where interest rates may be on the way down instead of up. Globally, inflation is estimated to have come down to 6.9% from 8.7% last year.
Surprisingly, the U.S. economy also held up through the year despite worries at the start of it that a recession may be inevitable. For a while, the worry was even that the economy may be too strong, which could have fed into upward pressure on inflation and forced the Federal Reserve to keep interest rates higher for longer.
Now, with the economy still growing and expectations rising for cuts to rates coming in 2024, investors have rushed to get ahead of the moves, which can act like steroids for all kinds of markets. U.S. stocks bounced back from their dismal 2022, which was Wall Street’s worst year since the dot-com bubble was deflating two decades earlier.
Much of Wall Street’s run was due to just a small group of stocks, but breadth was better around the world. Stock markets across the Americas, Europe and Asia all rose.
Higher interest rates left their mark, however, notably in the U.S. housing market. Sales of previously occupied U.S. homes slumped in October to their slowest pace in more than 13 years.Here’s a look at some of the striking numbers that shaped global financial markets in 2023:
Inflation
● 3.1%: The headline inflation rate at the consumer level in November in the U.S.
Inflation peaked at 9.1% in June 2022. The Federal Reserve’s target level is 2%.
● 2.4%: Overall inflation in the European Union in November, a far cry from a peak of 10.6% in October 2022. Energy prices plunged 11.5% from the same month a year earlier. But food inflation remains stubbornly high at 6.9%.
● 55%: The price increase for U.S. used cars from February 2020 through the peak in January 2022. From January 2022 through this November, prices for used cars declined 11.5%.
● $4: National average price per gallon of milk in November, up 25% from $3.20 just before the pandemic in February 2020.
● 161%: The rate of inflation in Argentina. The government has responded by slashing the country’s currency value in half, suspending public works and cutting subsidies for gas and electricity among a number of drastic measures.
Global economy
● 22: Consecutive months that the U.S. unemployment rate has come in below 4%, the longest streak since a 27-month run from November 1967 through January 1970. The job market held up even as the Federal Reserve tried to slow the economy to fight inflation.
● 67: The percentage of Americans that disapproved of President Biden’s handling of the economy in an October poll from The Associated Press-NORC Center for Public Affairs Research. That sentiment, if it persists, could hamper Biden in his expected election rematch with former president Trump.
● 9.4%: The estimated decline in investment in China’s property sector from January through October, according to the World Bank. Weakness in the property sector and in global demand for China’s exports, as well as high debt levels and wavering consumer confidence have weighed on the country’s economy.
● -0.1%: The contraction in Germany’s economy in the third quarter. Europe’s biggest economy should shrink again slightly in the current quarter, the Bundesbank estimates.
Markets
● 7: This small number of stocks was alone responsible for roughly twothirds of the S&P 500’s return in 2023 through mid-December. Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms are also Wall
Street’s biggest stocks.
● $43,000: Bitcoin surged past this level in December after starting the year below $16,300. It and other cryptocurrencies had tumbled last year as rising rates hit investments seen as particularly risky.
● 3: The combined number of days the S&P 500 rose or fell by at least 2% in 2023. The index rose 24.2% through the year, as of Dec. 19. In 2022, a down year for stocks, there were more than 40 such days.
Interest rates
● 5%: The peak for the yield on the 10year U.S. Treasury, a level not seen since 2007. Bond yields marched higher for much of the year, then reversed sharply over the last two months. The 10-yield stood at 3.92% on Dec. 19.
● 7.88%: The average rate on a 60month auto loan in August 2023, according to the Federal Reserve Bank of St. Louis. The rate was 5.27% in August 2019.
● 21.2%: The average credit card interest rate as of August, according to the Federal Reserve. That’s up from 16.3% in 2022 and 14.6% in 2021.
● 3: The number of times Federal Reserve officials expect to cut interest rates in 2024, according to recently released projections. The Fed raised rates 11 times between March 2022 and July of this year before pausing.
Housing
● 7.79%: The average rate on a 30-year mortgage on Oct. 26, according to Freddie Mac. It was the highest average rate since Nov. 11, 2000.
● $2,199: The median monthly payment listed by prospective homebuyers on mortgage applications in October, a 9.3% increase from a year earlier.
● 67%: The share of U.S. homeowners who had a home loan with a fixed rate of 5% or less as of September.
● $391,800: The median sales price of a previously occupied U.S. home in October. It was up 3.4% from the same month in 2022.