The 0.6% m/m falls in retail sales and manufacturing output in November suggest that the economy has lost some serious momentum, with the resilience of consumers to much higher interest rates starting to crumble. Solid gains in previous months mean real consumption growth should still be strong in the fourth quarter as a whole, but we expect the economy to slip into a mild recession in the first half of next year as the Fed’s relentless hawkishness takes its toll.
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