In the linked article, the author discussed the anticipated numbers that will be reported for CPI and PPI for the previous month. This report is to be released this Friday, these reports will greatly influence how the Fed will decide to cut tax rates for this year. It will influence when rates are cut, how much the rate will be reduced, and potentially how many times the rate will be cut this year. If the report releases the numbers expected by the article, a 0.3% increase in inflation and a 0.4% increase in core index, it is quite likely that the Fed will choose to not cut rates before May. As a result of slightly higher inflation and no upcoming tax cuts there will likely be less consumer spending and more investments in the upcoming months. However, once those inevitable tax breaks occur there will likely be a great increase in consumer spending. However, much of the presented information is simply predictions so we will have to wait for additional developments within the next couple of months to see if those predictions were produced.
Additionally, the article mentions that a government shutdown is likely to occur. This is largely due to a disagreement on a proposed bill for a new budget for Capitol Hill. Traditionally investments tend to go down in case of government shutdowns, however, there have been high levels of investments in the stock market, likely influenced by the actions of Nvidia and Amazon. However, if there is no agreement for the bill the government will shut down, resulting in less government spending which will greatly reduce the amount of output for the economy. This decrease in government spending will decrease GDP and slow job creation and consumer spending. Those who are aware of this issue are likely to increase their savings to brace for the impact of the potential shutdown.
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