The Day at a Glance | December 23 2020
· Inflation in Mexico stabilizes during the first half of December (3.22% annual vs 3.15% e.).
· Trump delays signing fiscal stimulus in the US and asks for last minute changes.
· Mexican economy grows 1.6% during October, boosted by the industrial sector (2% monthly).
· Economic indicators: Jobless claims in the US, 803k vs 880 k e.; PCE inflation in US, 1.1% Nov.
Inflation in Mexico stabilized during the first half of December as it recorded a biweekly rise that exceeded estimates and set at 3.22% annual. The National Consumer Price Index grew 0.34% in the first half of December (vs. 0.28% e.), after seeing a contraction in the prior period. With this, general inflation stabilized at an annual rate of 3.22%. The largest biweekly rise was recorded in non-food goods (1.38%), whose prices in November had dropped substantially due to extended discounts during the “Buen fin”. Prices for fruits and vegetables fell (-) 4.04%, which led non-underlying inflation to record a contraction in the period (-0.23% biweekly). Regarding underlying inflation, figures set above estimates (0.52% biweekly vs 0.41% e.) and the index rebounded to an annual rate of 3.81%. The figures suggest that the effect seen in November was temporary. The Bank of Mexico is expected to wait for new information during the first months of 2021 before deciding to resume the cycle of cutbacks.
President Donald Trump calls the stimulus package a “disgrace” and calls on Congress to amend coronavirus relief package. Reports yesterday suggested that the President had signed the stimulus package but he only signed a temporary bill for government funding until December 28th. Last night, the President posted a video on Twitter in which he criticizes the bill approved by Congress, which was strongly backed by both parties. Trump asked for deposits made to citizens to increase from $600 to $2,000 or $4,000 dollars and for some unnecessary parts of the bill to be eliminated. It`s still not known if the President will veto the stimulus bill but his decision could delay the aid expected to be given next week, according to the Treasury Department. President Trump has until December 28th to sign the bill; in case the bill is not signed by then, not only will there be no fiscal stimulus, but there could be a total government shutdown. Democratic Leader of the House of Representatives Nancy Pelosi agreed with the President`s proposal and will seek to approve a new bill with the Democratic Party before Christmas; even though it`s not likely that it will have Republican support. Congress will take a recess during Christmas and will not resume activities until December 28th and 29th.