A recent inflation report has delivered surprising news that could shift the economic narrative going into the new year. The consumer price index (CPI) for November revealed an annual inflation rate of 2.7 percent, a significant drop from the previous month’s figure of 3 percent. This decline is particularly notable given that no report was issued for October due to a government shutdown, leaving experts stewing over predicted rates, with many anticipating a figure closer to 3.1 percent.
The core inflation rate also showed promising numbers, sitting at 2.6 percent—the lowest since early 2021. Core inflation, which excludes the more unpredictable food and energy prices, reflects a healthier ongoing trend in the economy. The Wall Street Journal emphasized the importance of these findings, suggesting they might indicate a market shift.
Adding to this positive economic outlook, initial unemployment claims for the week ending December 13 dropped to 224,000, falling from 237,000 the prior week. This too surpassed the expectations of many experts who had forecasted claims to hover around 225,000. The combination of these favorable reports propelled stock futures upward, with futures linked to the Dow Jones surging by 188 points.
Harvard Professor of Economics Ken Rogoff commented on November’s inflation numbers, stating, “I was surprised. It was a better number than anyone was expecting.” His relief was clear: “It was positive news—there’s no other way to spin it.” Analysts often embrace fluctuations in inflation as indicators of the broader economic health, and Rogoff’s sentiment resonates with many as the country looks forward to 2026.
Economist Stephen Moore echoed this optimism, describing the inflation figure as “amazing.” He stated, “This is good news for Wall Street, it’s good news for Main Street. It’s good news for the Federal Reserve board.” Moore suggested that these positive gains could pave the way for a potential interest rate cut, which would further stimulate economic activity. His delight was palpable when he remarked, “I got a big smile on my face right before Christmas with this number.”
This report signals a refreshing change in sentiment towards the economy, one that may impact decisions at the Federal Reserve and soothe skeptics on the street. As the year draws to a close, hope may well be on the horizon.
"*" indicates required fields
