Summary of Key Points from the December FOMC Minutes Industry Overview - The document discusses the economic outlook as assessed by the Federal Open Market Committee (FOMC) of the Federal Reserve, focusing on employment and inflation trends in the U.S. economy. Core Insights and Arguments - The December FOMC minutes indicate a dovish shift in monetary policy expectations, with "most" participants anticipating further rate cuts if inflation slows as projected [5][6][7] - Chair Powell's assessment during the meeting highlighted a more cautious view on employment and inflation, suggesting that the balance of risks is shifting towards downside risks for employment and away from inflation [7][10] - "Several" participants noted a decrease in upside risks to inflation, contrasting with previous assessments where "many" had expressed concerns about persistent inflation [8] - The unemployment rate, which rose to 4.4% in September, is now viewed as a sign of increased fragility in the labor market, with expectations that it may reach 4.7% in December [9] - The minutes suggest that the trade-off between employment and inflation may not be as challenging as previously thought, given the more optimistic outlook for inflation [10] Additional Important Details - The FOMC minutes reflect a consensus that while inflation risks remain, the perception of these risks has shifted, with a majority now expecting continued disinflation in housing services [8] - The decision to initiate reserve management purchases in December aligns with the assessment that reserve levels have declined to an ample region, indicating a need for clearer definitions of "ample" reserves [11] - The document emphasizes the importance of considering these insights in the context of broader economic indicators and potential investment strategies moving forward [3][4]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the Federal Open Market Committee (FOMC) and its economic projections, focusing on interest rate policies and inflation expectations. Core Insights and Arguments - **Interest Rate Cuts**: Most FOMC participants supported the December rate cut, with expectations to continue lowering rates into 2026 if inflation aligns with projections [2][4][8] - **Diverse Opinions**: A few participants expressed concerns about the labor market data justifying a rate cut, indicating a split in opinions among the members [3][8] - **Inflation Concerns**: Despite inflation remaining above target, most participants anticipated further rate cuts if inflation decreases as expected [4][8] - **Labor Market Outlook**: There is a notable concern regarding the labor market, with many participants indicating that a neutral policy stance could help prevent significant deterioration in labor conditions [3][9] - **Balance Sheet Discussion**: The FOMC approved "Reserve Management Purchases" to manage reserve balances in the banking system, addressing tensions in repo markets [10] Important but Overlooked Content - **Economic Projections**: The December summary of economic projections indicates a change in real GDP expected at 1.7% for 2025 and 2.3% for 2026, with unemployment rates projected to decrease slightly over the years [6] - **Volatility in Claims**: Initial claims for unemployment insurance are expected to rise slightly, reflecting seasonal volatility around the holidays [11][14] - **Manufacturing Index**: The FRB of Dallas manufacturing index fell to -10.9, indicating continued contraction in the manufacturing sector for five consecutive months [19][23] - **Pending Home Sales**: The pending home sales index rose by 3.3% in November, although it remains historically low, indicating a mixed outlook for the housing market [27] This summary encapsulates the key points discussed in the conference call, highlighting the FOMC's stance on interest rates, inflation, and economic projections, along with additional insights into the labor market and housing sector dynamics.

Summary of Key Points from the Conference Call Industry Overview - The discussion primarily revolves around the U.S. Consumer Price Index (CPI) and its implications for inflation trends in the economy, particularly focusing on the November CPI report and its biases due to the government shutdown. Core Insights and Arguments 1. **CPI Biases**: The November CPI report exhibited a downward bias due to three main factors: - Carrying forward April rent levels for October, leading to a 0.09% bias on the headline CPI and 0.12% on the core CPI [doc id='38'] - Carrying forward August price levels for items on a bimonthly sampling, resulting in a 0.08% bias on the headline CPI and 0.10% on the core CPI [doc id='39'] - A late start to November sampling on November 14, which biased the CPI down by approximately 0.05% to 0.10% for the headline CPI [doc id='46']. 2. **CPI Changes**: The November CPI showed a significant decline, with the core CPI dropping from 3.02% in September to 2.63% in November, attributed to the government shutdown's impact [doc id='5']. 3. **Projected Inflation Rates**: - Core PCE inflation is projected to be 2.8% in 2025, 3.0% in 2026, and gradually decreasing to 2.0% by 2028 [doc id='3']. - The December CPI is expected to show a 0.44% increase, with core CPI inflation projected to rise to 2.87% [doc id='5']. 4. **Vehicle Prices**: New vehicle prices remained stable despite the expiration of the electric vehicle tax credit, indicating minimal impact from this policy change [doc id='20']. 5. **Quality of CPI Data**: The quality of the November CPI data was noted to be poorer than usual, with many series lacking sufficient observations to meet publication standards, reminiscent of early COVID-19 reporting [doc id='5']. Additional Important Points 1. **Sampling Methodology**: The BLS did not attempt a "good faith" estimate for missing October data, opting instead for carry-forward imputation, which contributed to the downward bias in the CPI [doc id='8']. 2. **Sector-Specific Insights**: - The CPI for new vehicles has shown little change despite rising tariffs, indicating a disconnect between tariff impacts and consumer prices [doc id='29']. - The difference in rent growth between single-family and multifamily units suggests ongoing disparities in the housing market, potentially affecting future CPI calculations [doc id='21']. 3. **Future Projections**: The biases observed in the November CPI are expected to reverse in subsequent months, particularly with strong increases anticipated in the April CPI release [doc id='38']. 4. **Economic Context**: The discussion highlights the broader economic implications of inflation trends, consumer behavior, and the impact of government policies on price levels, emphasizing the need for careful monitoring of CPI data moving forward [doc id='6']. This summary encapsulates the critical insights and projections discussed in the conference call, providing a comprehensive overview of the current state of the U.S. inflation landscape and its implications for future economic conditions.

31 December 2025 | 12:58PM EST Economics Research Global Economics Wrap-Up: December 31, 2025 Global Economics 12/31/25 10:42AM ET US Economics 12/31/25 12:00PM ET Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Joseph Briggs +1(212)902-2163 | joseph.briggs@gs.com Goldman Sachs & Co. LLC Andrew Tilton +852-2978-1802 | andrew.tilton ...

Economic Indicators and Employment Data - The Bureau of Labor Statistics (BLS) will release November job openings, quitting, and layoffs data, alongside the December jobs report [2] - Economists project that approximately 60,000 jobs were added in December, resulting in a total of about 670,000 jobs added for 2025, significantly lower than the 2 million jobs added in 2024 [5] - The jobless rate is expected to decrease to 4.5% in December from a four-year high, indicating a modest employment growth trend [5] Inflation Trends - In the euro zone, inflation reports for Germany and France are due, with expectations that the headline inflation will stabilize at 2% and core inflation at 2.4% [6][7] - Switzerland's inflation is predicted to slightly increase to 0.1% after an unexpected drop to zero in November, which aligns with the central bank's forecast [11] - Australia's CPI figures are expected to show a modest easing of inflation, remaining above the central bank's target, which will influence the Reserve Bank of Australia's policy stance [14] Central Bank Policies - The European Central Bank (ECB) is expected to maintain a cautious approach to monetary policy, with upcoming data likely supporting the stabilization of inflation at target levels [7][8] - In Latin America, central banks in Chile, Peru, and Mexico may consider mild adjustments to monetary policy, while Brazil is positioned for aggressive unwinding of rates [17][18] - Peru's central bank may hold rates at 4.25% due to inflation running below the target range, reflecting a cautious approach amid upcoming elections [19] Sector-Specific Insights - The rapid adoption of artificial intelligence is seen as a limiting factor for payroll growth, as companies focus on enhancing productivity [3] - Employers have slowed hiring in 2025, indicating a stabilization in job openings and a cautious approach to additional hiring due to government trade-policy announcements [4]

Core Viewpoint - The Federal Reserve Bank of Philadelphia President Anna Paulson indicated that further rate cuts by the central bank may be delayed as officials assess the economy's performance following last year's easing measures [1][2]. Economic Outlook - Paulson forecasts inflation to moderate, the labor market to stabilize, and growth to be around 2% for the year [2]. - She expressed cautious optimism regarding inflation, suggesting a potential end-of-year inflation rate close to 2% as tariff-related price adjustments conclude [5]. Interest Rate Policy - The current funds rate is viewed as somewhat restrictive, still working to alleviate inflation pressures [3]. - The Federal Open Market Committee (FOMC) reduced the interest rate target by 0.75 percentage points last year, now set between 3.5% and 3.75% [3][4]. Labor Market Insights - The labor market is showing signs of deceleration but is not breaking, with both supply and demand factors contributing to the hiring situation [6]. - Close attention is warranted on the hiring front as the year progresses [6].

Core Viewpoint - The Federal Reserve may consider further interest rate cuts if inflation decreases, but such reductions are not expected to happen immediately [1] Group 1 - Philadelphia Fed President Anna Paulson indicated the possibility of additional interest rate cuts contingent on inflation trends [1]

Group 1 - Social Security is a crucial source of retirement income for millions, and understanding its rules and changes is essential for retirees [1] - In 2026, Social Security benefits will receive a 2.8% cost-of-living adjustment (COLA), which is slightly higher than the 2.5% increase in 2025, but may not significantly help due to rising costs [2][3] - Medicare Part B costs are increasing, which will reduce the impact of the COLA on retirees' monthly benefits [3] Group 2 - Tariff policies may contribute to rising prices, potentially causing the 2.8% COLA to lag behind inflation, although they could also lead to lower inflation if they slow down spending [4] - Retirees relying heavily on Social Security should consider backup plans, such as reducing expenses or seeking part-time work, in case the COLA does not provide sufficient support [5] Group 3 - Seniors can now earn more income without risking withheld benefits once they reach full retirement age, allowing for greater financial flexibility [6] - The earnings-test limit for those under full retirement age has increased to $24,480 in 2026, up from $23,400 in 2025, meaning that earnings above this threshold will result in $1 in benefits being withheld for every $2 earned [8]

Group 1 - A significant portion of Americans are setting financial goals for the New Year, with 75% of those making resolutions focusing on increasing their income, driven by concerns over inflation and the labor market [1] - The average monthly earnings for Americans with side hustles decreased to $442.76 in 2025 from $688 in 2022, indicating a shift in side gig income trends [2] - The most common income range for side hustlers is between $51-$250, with 32.1% of respondents falling within this bracket, while about 10% earn over $1,000 per month, which skews the average higher [3] Group 2 - A Bankrate survey reported a higher average monthly income for side hustlers at $885 in 2025, slightly down from $891 in 2024 but up from $810 in 2023, suggesting variability in income across different surveys [4] - Earning between $500-$1,000 per month is considered close to or above average for side gigs, while lower earnings of $51-$250 are common among many side hustlers [5][6] - Individuals with aggressive financial goals, such as paying off debt or saving for a house, may need to aim for higher income ranges, acknowledging that averages can be skewed by top earners [7]

Core Insights - U.S. credit card debt has reached a record high of $1.13 trillion and is projected to exceed $1.5 trillion in the coming years, indicating that consumers are increasingly relying on credit cards to cover budget deficits exacerbated by inflation [3][5][6]. Demographics of Credit Card Debt - Younger generations are expected to have credit card debt due to lower earnings, but surprisingly, older individuals are accumulating higher debt levels, often entering retirement with significant debt [7][8]. - One in three Americans have maxed out their credit cards, highlighting a growing trend of reliance on credit for survival [6]. Economic Context - Inflation has led to rising costs in essential goods, such as food and gas, while wages have not kept pace, forcing consumers to turn to credit cards [2][3]. - During the pandemic, credit card debt decreased significantly from about $1 trillion to $500 billion due to reduced spending, but it has since rebounded to record levels as spending resumed [4]. Debt Management Strategies - Individuals are encouraged to assess their financial situation by understanding their income and expenses, identifying areas where they can cut costs, and prioritizing paying off high-interest debt first [25][28][29]. - Debt.com offers tools and resources, such as the Instant Debt Advisor, to help individuals manage and reduce their debt effectively [26][30]. Cultural Attitudes Towards Debt - There is a generational shift in attitudes towards debt, with younger individuals more accepting of carrying debt as a norm, contrasting with older generations who view debt negatively [35][36]. - The lack of formal education on debt management in schools contributes to this issue, as many young people do not receive adequate guidance from their parents, who may also be in debt [38].