The US economy continues to defy expectations, growing at an annualized rate of 3.1% in the third quarter of 2024, according to the Commerce Department. 

That’s another upward revision from the initial estimate of 2.8%.

Growth was driven by stronger exports, increased consumer spending, and robust federal government expenditures, even as private inventory investment slowed.

For context, the US economy has outpaced global peers like the EU and Canada over the past two years.

With strong consumer spending, rising productivity, and moderating inflation, the picture looks bright.

But can this momentum last, or are hidden risks threatening the outlook?

Why is growth still so strong?

Consumer spending remains a key driver for this resilient economy.

Accounting for roughly two-thirds of US economic activity, spending grew at an annualized 3.7% in Q3.

This is the fastest pace since early 2023. 

Despite higher living costs, consumers have continued to spend, bolstered by a healthy labor market and wage increases.

Federal spending, particularly on defense, jumped 13.9%, adding to the momentum.

Exports also surged, growing by 9.6% in Q3. Meanwhile, business investment in equipment increased by 10.8%, though overall business investment remained modest at 0.8%.

These numbers highlight the resilience of the US economy even under higher interest rates.

In contrast, the EU and Canada have struggled to achieve similar productivity or growth.

US worker productivity rose at least 2% year-over-year for five consecutive quarters through September.

This sustained productivity boost has helped companies operate efficiently, keeping costs in check while maintaining output.

What’s behind US productivity gains?

Unlike other economies, the US has benefited from a unique combination of factors post-pandemic.

Companies, faced with a tight labour market, have leaned heavily on technology and automation to boost output. Self-checkout systems and AI-driven processes are now common in retail and other sectors.

Labour market flexibility has also played a role. During the pandemic, millions of Americans switched jobs or industries, often moving into higher-responsibility roles.

According to a Pew Research analysis, about 35% of workers changed employers in 2022, compared to 30% in typical years pre-pandemic. Many of these moves translated into higher productivity.

Business formation has also surged.

High-propensity business applications, a metric for likely sustainable startups, have risen by a third compared to pre-pandemic levels.

These startups, especially in technology, are often focused on efficiency and innovation, further fuelling the productivity boom.

What risks lie ahead?

While the US economy looks strong, several risks could undermine growth. Let’s not forget that inflation has remained sticky, even if it’s getting closer to 2%.

Recent upticks in prices, such as higher egg costs due to bird flu outbreaks, are reminders of how fragile stability can be.

The Federal Reserve has acknowledged the possibility of future shocks and revised inflation forecasts slightly higher for 2025.

President-elect Donald Trump’s policies could also play a role in shaping the economy.

Proposed tariffs on key trading partners, including China, could raise costs for imported goods, potentially reigniting inflation.

If inflation rises again, the Fed may be forced to pause or reverse its rate cuts, keeping borrowing costs elevated for longer.

Higher interest rates are already impacting the housing and auto markets. Families face higher mortgage and car loan payments, limiting their purchasing power.

Equity markets reacted sharply to the Fed’s hawkish stance, with the S&P 500 dropping nearly 3% on Wednesday, its worst decline since August.

This emphasizes how small scares about the outlook of the US economy can quickly trigger sell-off events in the markets.

Is this growth really sustainable?

The current strength of the US economy stems partly from policies that may not be easily replicable.

Biden-era investments in manufacturing and semiconductor production boosted growth, but sustaining this momentum may require additional policy support. 

Manufacturing employment remains near its highest levels since the 2008 financial crisis, but output is beginning to wobble.

Consumer spending is another wildcard. While wages have risen, the pool of pandemic-era savings is dwindling.

If inflation remains sticky or borrowing costs stay high, households may cut back on spending, which could slow growth.

The global context also matters. European competitiveness lags, and China’s growth has been lackluster.

These dynamics have made the US the “envy of the world,” as some economists put it, but global uncertainty could spill over into domestic markets.

The bottom line

The US economy has been remarkably resilient, supported by productivity gains, consumer strength, and strategic investments.

Yet, the US must not undermine risks from inflation, tight monetary policy, a mixed labour market and geopolitical conflicts.

Even the slightest piece of bad news could shutter the economy’s momentum and shock the markets.

We’ve seen this scenario play out in August, following the triggering of the “Sahm rule” and the implosion of the yen carry trade.

Whether the current growth momentum can be maintained depends on how these factors play out in the coming months.

For now, the US stands as an outlier in a world of economic challenges—but for how long remains an open question.

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Cryptocurrencies endured a bloodbath following the Fed’s hawkish tone on Wednesday.

Despite the expected 25 bp interest rate reduction, Jerome Powell plunged markets with negative remarks.

Besides signaling a more cautious stance when navigating further policy rate adjustments, Powell dented the hopes of the highly-awaited Bitcoin Reserve.

Cryptocurrencies reacted to the Fed’s hawkish signals with wild volatility, with sellers dominating.

Bitcoin lost around $5,000 to $98,900 during Wednesday’s late sessions before recovering to $100,109 at press time.

The alt space suffered the most as many tokens plummeted by double-digits.

Cardano and Curve Finance grabbed investors’ attention as they dipped beneath their respective $1 marks.

Meanwhile, Hedera Hashgraph enthusiasts had positive news following the first physically-backed HBAR ETP launch on Euronext Amsterdam.

Cardano price drops below $1

ADA recorded impressive price actions as it rallied from the vital support barrier at $0.3.

The upside stance saw the token hitting yearly peaks at $0.8 and surged past $1.

However, bearish tendencies emerged as ADA failed to overcome the resistance at $1.3.

The token changes hands at $0.926 after plummeting from 24-hour highs of $1.05.

With its prevailing performance, Cardano will likely experience retracements in the mid-term.

It can slide towards the crucial foothold at $0.8 before upside resumptions.

Extended bearishness could call for support levels at $0.76 and $0.64.

Stability above $0.64 could trigger uptrends for ADA amid broad market recoveries.

The altcoin will likely target $1.42 and $1.72 before exploding towards $2.36.

Curve Finance price performance

CRV hovers at $0.8877 after intensified sell-offs within the past 24 hours.

It touched a daily high and low at $1.0538 and $0.8841, confirming massive volatility behind Curve’s price actions.

The wild declines went against the expectations of many.

For instance, Curve Finance founder Michael Egorov saw his latest acquisition liquidated, confirming the challenges that experienced and newbies encounter amid heightened volatilities

CRV displays significant weakness and will likely slide further before possible recoveries.

The Moving Average Convergence Divergence made a bearish crossover in the daily chart.

Also, the Relative Strength Index reflects faded momentum as sellers dominate.

Hedera HBAR ETP goes live on Euronext

The Hashgraph Group and Valour Digital Securities Limited (VDSL) launched a new product, the Hedera HBAR ETP, on Thursday, currently live on Euronext Amsterdam.

The move underscores the increasing connection between TradiFi and DeFi sectors while offering European investors seamless access to HBAR tokens.

Institutional and retail players can now invest in the native token without regulatory and transparent issues.

On the announcement, DeFi Technologies CEO Olivier Roussy Newton stated,

The addition of our Hedera HBAR ETP to Euronext exemplifies our commitment to simplifying access to cutting-edge digital assets.

Furthermore, the listing magnifies opportunities for retailers and institutions looking to participate in a massive and sustainable Hedera blockchain.

HBAR trades at $0.2879 after losing 2.10% in the past 24 hours.

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Despite sluggish demand in the retail jewellery market, Beijing-based Laopu Gold has emerged as a standout success.

With revenue skyrocketing 148% year-on-year in the first half of 2024 and stock prices surging 437% since its June Hong Kong listing, the jeweller has become the best performer on the Hang Seng Composite Index this year.

Since its market debut, the 14-day relative strength index (RSI) of Laopu Gold’s stock has surpassed 80 on at least five occasions—a notable achievement often signalling a strong outperformer.

While an RSI above 70 typically suggests the stock may be overbought, analysts remain optimistic.

All 14 analysts covering the company have issued buy recommendations, according to Bloomberg data.

The Hermès of gold: what’s behind Laopu’s irresistible allure?

Laopu Gold has maintained an impressive gross margin above 40% over the past three years, far surpassing the industry average of 8% to 20%.

Founded 15 years ago, the jewellery maker distinguishes itself by focusing on heritage gold jewellery inspired by Buddhism, priced as high-end luxury items rather than by weight.

This strategy has elevated the brand, drawing comparisons to global icons like Cartier and Tiffany.

Offering fixed prices for its jewellery, it has distanced itself from fluctuations in gold prices that typically influence consumer behaviour in China.

The brand also distinguishes itself with unique practices: it avoids franchising, operates only directly managed stores, and exclusively uses “old craft” pure gold, with no low-carat options.

This approach has earned Laopu the moniker “Hermès of gold,” cementing its place as a luxury leader in China’s jewellery market.

Laopu’s “relatively small size” is also an advantage that allows it to focus on quality over quantity, said Mark Tanner, managing director of consultancy China Skinny in Shanghai, as reported by Bloomberg.

The brand “fills a space” in the untapped China-made luxury market, he said.

With just 33 stores, the brand’s exclusive presence enhances its appeal among China’s high-net-worth clientele.

A 7.2-gram Laopu necklace can retail for 11,230 yuan (US$1,540)—a premium far above its weight-based value—further solidifying its luxury standing.

For wealthy patrons seeking bespoke pieces that incorporate classic Chinese motifs, prices can reach hundreds of thousands of yuan.

Laopu Gold stock bucks broader market trends

While many Chinese retailers await government stimulus to boost consumption, Laopu Gold has already carved a thriving niche.

Its focus on wealthy repeat customers has paid dividends, with loyalty members making purchases five times or more doubling since 2021.

JPMorgan Chase analysts forecast Laopu’s revenue to grow by 55% annually between 2024 and 2026.

The company plans to expand its footprint with 10 new stores in mainland China and five across Hong Kong, Macau, Singapore, and other Asian cities within three years.

The jeweller also capitalizes on digital sales via Alibaba’s Tmall, JD.com, and WeChat, enhancing its reach beyond brick-and-mortar locations.

Despite its successes, Laopu Gold faces potential hurdles. Maintaining its aura of exclusivity while scaling operations will be critical, Tanner said.

Additionally, fluctuating gold prices and intensifying competition from established brands like Chow Tai Fook and Cartier may test its resilience.

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The Indian rupee saw a modest recovery on December 20, appreciating by 6 paise to open at Rs 85.07 against the US dollar in early trade.

This comes after it hit an all-time low of Rs 85.13 the previous day, depreciating by 19 paise.

The currency briefly stabilised during the session, trading at Rs 85.10 by midday, as foreign exchange markets navigated a mix of global and domestic pressures.

While this rebound offers a sliver of optimism, significant headwinds persist, raising concerns over the rupee’s stability in the near term.

Dollar strength drives rupee’s decline

The rupee’s struggles can be largely attributed to the ongoing strength of the US dollar, supported by global economic conditions.

The Dollar Index (DXY), which measures the greenback’s performance against a basket of six major currencies, edged up by 0.03% to 108.43.

Forex traders cited the Federal Reserve’s cautious stance on future rate cuts as a contributing factor.

The central bank recently reduced its expected number of rate cuts in 2025 from four to two, bolstering the dollar and placing emerging market currencies, including the rupee, under considerable pressure.

Domestically, the Reserve Bank of India’s (RBI) limited intervention and tightening liquidity in the banking sector have amplified challenges for the rupee.

Analysts predict that the USDINR pair will remain within the Rs 84.70 to Rs 85.20 range in the short term.

Foreign Institutional Investor (FII) outflows have further strained the currency.

On December 19, FIIs sold shares worth Rs 4,224.92 crore in Indian capital markets, extending their recent trend of offloading assets.

Meanwhile, falling equity markets are also weighing on sentiment.

The BSE Sensex slipped 145.13 points to trade at 79,072.92, while the NSE Nifty declined by 17.40 points to 23,934.30.

Weakness in equities often exacerbates currency depreciation by reducing investor confidence in the local market.

Oil prices offer temporary relief

Amid these challenges, declining crude oil prices have emerged as a rare positive for the rupee.

Brent crude futures dropped by 0.62% to $72.43 per barrel, alleviating pressure on India’s import bill.

As one of the world’s largest oil importers, lower prices provide some cushion to the rupee by narrowing the trade deficit.

This relief may be short-lived if global oil prices rebound or other external pressures intensify.

Despite its marginal recovery, the rupee faces a tough road ahead.

Sustained dollar strength, domestic issues such as limited RBI intervention, and persistent FII outflows will likely keep the currency under pressure.

In the near term, analysts recommend a cautious outlook, with the rupee expected to consolidate within its current trading range.

Without significant policy intervention or a reversal in global trends, the rupee’s path to sustained recovery remains uncertain.

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The largest strike in Amazon’s history, organized by the International Brotherhood of Teamsters, erupted across the US this week, marking a significant escalation in the ongoing battle for better wages, benefits, and workplace safety.

Thousands of Amazon workers and Teamsters affiliates staged protests outside fulfillment centers in cities like New York, Atlanta, San Francisco, and Chicago, with demonstrations aimed at forcing the online retail giant to the bargaining table.

This industrial action, coming during the critical pre-Christmas rush, has added pressure to Amazon’s sprawling logistics network, already under scrutiny for alleged anti-union tactics and workplace safety concerns.

Amazon workers strike: seven major sites

The Amazon workers strike has already impacted key logistics hubs across the US, with picket lines forming early at delivery stations in New York City, Atlanta, San Francisco, and Southern California.

The union, representing nearly 9,000 Amazon workers from 20 bargaining units, described this as a “historic effort” to secure a union contract.

Amazon has refused to recognize the Teamsters as representatives of its workers, alleging that the union coerced employees into joining.

While the striking workers make up less than 1% of Amazon’s global workforce of 1.5 million employees, the disruption has been felt.

At a facility in San Francisco, protesters blocked entrances, forcing delivery vans to reroute.

Similar scenes unfolded in New York, where striking workers gathered outside a key delivery station, demanding safer working conditions and higher wages.

Amazon has pushed back against these actions, claiming that the majority of protesters are “outsiders” not employed by the company.

According to a company spokesperson, the strikes have had minimal impact on operations and customer deliveries.

Yet, the union asserts that these demonstrations are only the beginning, with plans to extend the strike to more locations, including Staten Island, home to Amazon’s first unionized warehouse.

Amazon workers strike 2024: what is the reason?

Amazon workers have long accused the company of prioritizing profits over safety, with injury rates reportedly higher than the industry average.

A Senate investigation earlier this year highlighted safety concerns, adding weight to the Teamsters’ demands.

The union has also criticized Amazon’s anti-union strategies, which include hiring consultants and challenging unionization efforts through federal regulators.

Despite these allegations, Amazon touts its pay and benefits as industry-leading, with an average hourly wage of $22 for warehouse and delivery workers, plus health insurance and retirement plans.

However, critics argue that the compensation falls short of what unionized workers in similar roles earn, particularly when considering the physical demands and injury risks associated with Amazon’s operations.

The strike also underscores the broader challenges facing the labor movement, which has struggled to unionize the tech giant’s workforce.

The Teamsters are relying on a strategy of escalating industrial action rather than traditional union elections, aiming to force Amazon into negotiations through widespread disruption.

Amazon workers’ strike threatens holiday logistics delays

The Amazon workers’ strike could pose a significant challenge to the company’s ability to manage its holiday season logistics.

Although Amazon claims its network is resilient, experts suggest that sustained action could lead to delays, particularly in major cities like New York, Atlanta, and Chicago.

The strike also highlights the complexities of Amazon’s business model, which relies heavily on third-party contractors for delivery operations.

The company has argued that these workers are not directly employed by Amazon, a claim disputed by the National Labor Relations Board, which considers Amazon a joint employer.

This distinction has become a focal point in the broader debate over the company’s labor practices.

As the strike continues, the Teamsters are expected to ramp up their efforts, with plans to target additional facilities in the coming weeks.

Whether Amazon will engage with the union remains uncertain, but the growing support for the strike, both from workers and the public, suggests that the company may face increasing pressure to address its labor practices.

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