Macro & Market Musings are weekly insights on Growth, Inflation, Policy and Looking Ahead from Annex Wealth Management’s Chief Economist, Brian Jacobsen. Brian, a frequent contributor on CNBC and Fox Business News, hosts regular updates on the economy and markets. Check our events page for Brian’s next live event.

Growth: Black and Blue Friday?

Black Friday has never been a great gauge of what holiday shopping will be. There was mixed performance with e-commerce sales hitting a record with fantastic growth (+14.6% y/y), but brick-and-mortar sales crawling ahead by 0.7%. Consumers care about value relative to price and staying better within their budgets. That’s not a bad thing, but it is a marked change from the trend of the last few years where consumers had more liberty to flex their budgets. A mildly more frugal consumer has already left some retailers black and blue.

Inflation: Frankenstein’s Monster

Fed Governor Waller used a colorful metaphor to describe the battle against inflation. He said it was like a mixed martial arts (MMA) fight where right when he thinks the Fed has inflation in a choke hold it keeps slipping out of the Fed’s grasp. That sounds noble and all, but inflation is a creation of fiscal and monetary policy. It’s not some opponent that came out of nowhere. It’s a creature of the Fed’s own creating. It will be defeated, but it has wreaked havoc on the villagers already and the villagers are the ones paying the price of the battle.

Policy: Playing Its Trump Card?

One thing China has a near monopoly on is processed rare earth minerals. These are metals used in missiles, lasers, electric vehicles, semiconductors, and many other things. It’s a dirty job processing these and China processes nearly 90% of the world’s supply. China has often used its dominance to retaliate against other countries. This past week, China banned the exports of critical minerals to the U.S. in retaliation for the Biden administration’s restrictions on China’s access to chip-making components. China may have played its trump card too soon as Trump’s new tariffs haven’t even taken effect yet.

Looking ahead: Port In The Storm?

This past week we got a couple reminders about how the U.S. political system is–contrary to many people’s perceptions–surprisingly stable. South Korea had a crisis where the president declared martial law only to have it overturned by the National Assembly. France’s Prime Minister didn’t survive a no-confidence vote, so parliament was dissolved. As long as American consumers do what they do best, consume, and American businesses do what they do best, innovate and make profits, the U.S. can continue to be the favored place to invest.