With the ‘sugar rush’ of the US elections fading, attention turned back to the state of the global economy last week with a couple of data points worth mentioning.

UK third-quarter GDP came in short of expectations due to poorer manufacturing output, prompting a good deal of hand-wringing and laments that the nation was ‘stagnating’ due to restrictive interest rates.

For our money, however, the IEA (Institute of Economic Affairs) had it pretty much right when it observed: ‘The incoming government’s downbeat rhetoric about the "economic inheritance" clearly had a negative effect on business and consumer confidence.’

The other salient data point was Chinese retail sales for October, which surprised to the upside thanks to early promotional activity ahead of Singles Day, leading some commentators to suggest consumer spending was ‘stabilising’.

Chinese industrial production was slightly below forecasts but still grew at a 5%-plus clip, and if anecdotal evidence is to be believed we could see an acceleration into year-end as US companies scramble to buy goods ahead of the introduction of swingeing tariffs.

Meanwhile, expectations for lower US rates have been well and truly rolled back, with one quarter-point cut seen in December and a reduction of just 1% or 100 basis points in 2025 after Fed chair Jerome Powell said last week there was ‘no need to rush rate cuts’ given the US economy is still growing, the job market remains robust and inflation is still above the central bank’s 2% target.

Powell says, it is far too early to tell what impact Trump’s policies will have next year and the Fed’s job is not to predict the future.

This hawkishness means the dollar continues to trade at year-highs against most currencies. 

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