FOMC & Rates, NFIB, Global Forecast, Holiday Sales, and who was Burt Meyer?
This Week, it was all about the FOMC
The big news was the FOMC – Federal Open Market Committee – dropped the Fed Funds rate by 0.25 percentage points.
Per Chairman Powell: “Conditions in the labor market appear to be gradually cooling, and inflation remains somewhat elevated.”
At this point in time, the focus is on jobs.
That brings the prime rate to 6.75%. It was 7.5% mere months ago.
The FOMC also projected GDP – the Gross Domestic Product – to be 1.7% this year and 2.3% next year.
Just as a point of illustration, Kiplinger is forecasting 1.9% for this year and next. Like I always say, you can line up all the world’s economists and still not reach a conclusion.
What wasn’t widely circulated was that the Fed was initiating a short-term treasury buyback to inject more money into the economy. Why?
Money market rates were starting to creep up above where the Fed thought they should be.
To fix this, the Fed decided to inject more money into the banking system by buying short-term Treasury bills.
This effectively impacts short-term interest rates by putting more liquidity into the banking system.
This isn’t meant to stimulate the economy, it’s just to keep the plumbing of the financial system working smoothly so the Fed can continue controlling interest rates the way it intends to.
Whew! That was very dull stuff for the week before Christmas. What else happened?
The NFIB – National Federation of Independent Businesses – had a slight uptick in confidence among its members. That’s good.
Initial jobless claims went from 192,000 last month to 236,000 this month. Ouch. Is that the cooling job market Jerry was talking about?
2026 Global Forecast – Courtesy of Kiplinger
GDP is expected to end up at 3% for 2025 and drop to 2.8% next year for the worldwide economy.
USA: A K-shaped economy may develop as high-income households driven by the stock market will keep spending. Middle and lower-income households may pull back as the labor market softens.
Europe: Eurozone growth of 1.1%, with Germany at 1.5%, driven in part by defense spending. France will not have much growth as politics keeps the market uncertain.
India: 6.4% GDP – WOW! This is driven by a burgeoning middle class. India is expected to surpass Japan to become the world’s fourth-largest economy.
That drops California down to the 6th spot. I’m not sure Sacramento will be touting that. But I digress…
China: 4.5% growth, continuing its slowdown as the population ages and the property sector continues to drag it down. Japan’s economy will continue to slow, coming in at 0.9%.
In Latin America, Mexico will continue to be the bright spot, coming in at 1.5% growth.
Finally… the US Dollar is expected to weaken 6% by year's end as rates continue to decrease.
A Mixed Holiday Season
According to Mastercard, sales were up 4.1% on Black Friday. But…
Consumers are pulling back on routine purchases and services. But…
They are giving priority to gifts and holiday meals.
Spending on haircuts and fast casual lunches is slipping as spending on clothing, toys, and other seasonal items remains strong.
Some of the biggest sales increases are in luxury goods, such as clothing and accessories, which were up 21%. Wow. The folks that have money are spending it. Sorry, that was kind of a Captain Obvious statement.
While the best way to spread Christmas cheer is singing loud for all to hear, another way is to have an increase of 7.7% in online sales.
Dollar General is reporting that its lower-income customers are making more frequent shopping trips and buying fewer items each time. And Dollar Tree raised its forecast for the fourth quarter.
Summed up: you’re going to get all your presents this year, but the family coming over will be looking just a little scruffy.
Kind of like Aunt Bethany.
Who was Burt Meyer?
If the firm Marvin Glass & Associates is familiar to you, then you already know, but I certainly did not.
Mr. Meyer was born in 1926 in Hinsdale, Illinois, about 20 miles west of Chicago. At his heart, he was a gifted designer, and his passion was… toys.
In 1944, he enlisted in the Navy, working as an aircraft mechanic for two years. He used the GI Bill to study art at West Georgia College, then attended the Institute of Design at the Illinois Institute of Technology.
He tried teaching, but didn’t like giving grades, so that wasn’t a good fit.
In the late 50s, he went to work for Marvin Glass & Associates, a toy designer based out of Chicago.
At the time, that firm was responsible for creating the games Operation and Mystery Date.
He soon became a partner and was responsible for a number of games, many of which are still around.
One example: Meyer and Glass went into an arcade to come up with ideas for new games and decided to prototype a boxing game. Just as they were about to introduce it, a boxer died in the boxing ring during a televised fight, effectively nixing the concept.
But wait… what if it were robots instead?
Thus was born Rock ‘Em Sock ‘Em Robots.
He retired at the age of 59, but not before creating Lite-Brite, Mouse Trap, Toss Across (just to name a few), and a game I played with my daughters in the 90s: Pretty, Pretty, Princess.
Upon retirement, he promptly rode his bike from California to South Carolina. Ten years later, he was part of an expedition to the North Pole.
That seems appropriate for a toy maker. He probably wanted to see where it all began.
He certainly did not let the grass grow under his feet.
Burt Meyer died on October 30 at the age of 99.
Burt’s secret? “You have to have a childlike imagination.”
He must have loved having six grandchildren and six great-grandchildren.
Now that’s a legacy.
This is the last full Russell Report of the year. Later this week, the annual “Night Before Christmas” year-end review will be released, and then the staff will be off for Christmas, New Year's, and a 38th-anniversary dinner. A full report will be back on January 5, 2026.
Depending on whether you are on budget for your business, department, or individual goals for the company you work for, December can be either relaxing or hectic. More often than not, particularly in banking, when clients want to close deals before year-end, it’s hectic. Many manufacturers are ‘Closed for the Holidays’ the last two weeks of the year, and accounting firms are beginning to brace for a tax season that now seems to take the entire year.
Regardless of which category you are in, and as I said last week, it’s important to take a breath. Then buy a Power Ball ticket worth $1,100,000,000.
Quote of the Week: “A toy is never truly happy until it is loved by a child.” – King Moonracer
