Bloomberg - Evening Briefing - The ‘Goldilocks economy’

While the headlines on US inflation are trending positive, that’s cold comfort for many Americans who need to shell out $119.27 to buy the same goods and services they could afford with $100 four years ago, before the pandemic. Grocery prices have risen 25% since January 2020, as has the cost of electricity. Rents are roughly 20% higher. And while many Americans made solid wage gains in what is still a robust job market, the progress hasn’t kept up with everyday expenses like the cost of gas, let alone a car to put it in. The price surge since 2020 has helped explain why many Americans continue to register dissatisfaction with the economy and why the Federal Reserve is extra keen to finish off inflation and get it back down to its 2% target. New data indicate things are on track for the central bank in the soft landing department with the economy finally simmering down. Consumer spending, inflation and the labor market all cooled in recent weeks, reinforcing forecasts central bankers are done raising interest rates. 

Prices for many household items have increased significantly from January 2020 to October 2023.  3D Illustration: Steph Davidson/Turbosquid(1), Getty(1)

Elsewhere, the economies of France and Canada unexpectedly shrank in the third quarter as inflation eased and high rates took a bite out of growth. But in the US, many economists and Wall Street observers agree with Treasury Secretary Janet Yellen when she says that the Fed’s so-far successful fight against inflation has a good chance of achieving a so-called soft landing. For Americans, a slowing economy could be welcome news, Conor Sen writes in Bloomberg Opinion. “In Goldilocks parlance, perhaps the economy in 2022 and most of 2023 was too hot and 2024 will be ‘just right.’”

The week-long truce is over, and Israel and Hamas have restarted their war in the Gaza Strip, one that continues to reverberate around the world in anger, division and a rise in hate crimes against Jews and Muslims. The Israeli military dropped leaflets in southern Gaza warning people to evacuate, a day after US Secretary of State Antony Blinken told Israeli leaders they must not repeat the scale of destruction and displacement inflicted in the north. Some 1.8 million Palestinians have been displaced according to the United Nations. It was one sign of a widening gap between allies, but Prime Minister Benjamin Netanyahu again stated the war would not end without “the elimination of Hamas.” Support for Hamas in the West Bank is surging—as is violence in that occupied territory. At least 225 Palestinians have been killed by Israeli soldiers or settlers in the West Bank since the Oct. 7 attacks, including more than 50 children, the UN said. Several settlers have also reportedly been killed, as were four Israelis in Jerusalem in a shooting at a Jerusalem bus stop.

Smoke rises following an Israeli strike in Gaza on Dec. 1 as the war resumed. Photographer: John MacDougall/Getty Images

Of all the sectors that required a reckoning after the pandemic, real estate is near the top of the heap. Around the world, people are dealing with a shortage of inventory, higher mortgage costs and other pressures. US home prices are reaching records and the federal government said that starting next year it will back mortgages of more than $1 million in additional high-price areas. In China, authorities are ramping up pressure on banks to support struggling real estate developers, signaling President Xi Jinping’s tolerance for property sector pain is nearing its limit.

World leaders kicked off the COP28 climate summit in Dubai, in the heartland of the global fossil fuel industry, with more promises to boost investment in green solutions cut greenhouse gases. India’s Prime Minister Narendra Modi offered to host the 2028 conference as he seeks to position his country—the third-largest emitter behind China and the US—as a climate leader. The Dubai summit however will also touch on earlier promises made and whether they’ve been kept. Meanwhile, in semi-dystopian fashion, extreme weather events and calamities turbocharged by global warming have television networks wanting to help and profit: Fixer-upper tv shows for homeowners who’ve suffered a disaster. 

Fort Myers Beach, Florida, following Hurricane Ian Photographer: Giorgio Viera/AFP

No federal law criminalizes the creation or sharing of fake pornographic images in the US. Now, victims, including a group of women in New York, are looking to change that. In Australia, port operator DP World said workers’ personal information was stolen in a cyberattack this month. US-based Okta, which manages user authentication services for thousands of businesses, said hackers who breached its network two months ago stole information on all users of its customer support system. That’s a lot more than the 1% of customers the company previously said were affected. 

If you’re a drinker who gets side-eye for putting ice in your white wine, consider the new breed of gadgets that get your vino to the perfect temperature. For a flawless holiday party, go buffet—also go for cheese. To get there, Bugatti, Ferrari and Mercedes remain the most popular—and expensive—classic cars on the market. In November, a 1962 Ferrari 330 LM/250 GTO sold for $51.7 million, the priciest car sold publicly in 2023.

For a flawless holiday party, go buffet—also go for cheese. Photographer: Illustration by Tarn Susumpow

• EU leaders travel to China for the first in-person summit in years.
• US jobs report for November with more signs the market is cooling.
• Winding-up hearing for China’s deeply-indebted Evergrande.
• Investors due to vote on Brookfield’s buyout bid of Origin Energy. 
• India state election results, with Modi’s party ahead in key states.

Sam Altman’s firing by OpenAI’s board laid bare the swirling conflict at the heart of the lucrative artificial intelligence sector. On one side is a group deeply concerned about AI’s destructive potential, while on the other is a more market-oriented faction that wants to accelerate innovation. Then there's Microsoft, the tech giant that’s invested billions of dollars in OpenAI. In the mini-documentary Inside the Battle for OpenAI’s Soul, Bloomberg Originals exposes the hidden tensions that led to Altman’s ouster—and his triumphant return.

Microsoft Corp. has sunk $13 billion into OpenAI and was a critical player in the drama around Sam Altman’s firing and rehiring. Photographer: Bloomberg Daybreak/Getty Images

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