by Louis Navellier
December 2, 2025
The bulk of the economic evidence points towards a Fed rate cut next week. First, we have strong new evidence that the labor market is under duress, as ADP reported last Tuesday that private companies have lost an average 13,500-jobs per week in the past four-weeks, a continuing trend since ADP’s July report.
Also, the Labor Department reported on Tuesday that the Producer Price Index (PPI) rose by 0.3% in September, which is in-line with economists’ consensus expectation. Excluding food, energy and trade services, the core PPI rose just 0.1%, well below economists’ consensus expectation of a 0.3% increase.
Also, wholesale service costs rose by only 0.1%. In the past 12-months, the PPI and core PPI have risen 2.7% and 2.9%, respectively, so inflation is enough in control to allow the Fed to cut interest rates further.
The economy is growing slower, too, which implies the need for rate cuts. The Commerce Department reported on Tuesday that retail sales rose just 0.2% in September, down from 0.6% in August. In the past 12-months, retail sales are up 4.3%, but vehicle sales declined 0.3% in September, despite the fact that the $7,500-tax credit boosted sales of electric-vehicles. September spending at bars & restaurants rose 0.7%, a sign that consumers have ample disposable income, but overall, this retail sales report was disappointing and below economists’ consensus estimate of a 0.3% increase, which may help coax the Fed to cut rates.
In other retail news, Bloomberg reported that retail sales have been resilient in big-box stores. Wal-Mart provided positive guidance, and I also expect Costco to report strong same-store sales growth, but the fear of a “K-shaped” recovery concerns many economists. A “K” shape is where rich Boomers are spending money freely, but younger consumers are struggling. It’s a split economy, one rising, the other falling.
After Black Friday and Cyber Monday, we will get a good indicator of whether or not consumers are in a mood to spend freely this holiday shopping season. The key for the Fed and the Trump administration is to see the “velocity of money” rise, since the faster money changes hands, the more prosperity spreads.
In Britain, monetary velocity is slowing down, as the new middle-class tax increases are now in effect, designed to attack a larger-than-expected budget deficit after many wealthy citizens fled Britain after Prime Minister Keir Starmer’s tax hikes. These new taxes will impact the vast majority of citizens, since their tax bracket levels are now lower. Vehicles will even be taxed for miles traveled! Limits on pension contribution exemptions will impact the vast majority of British citizens, who will now pay 40% tax rates.
Rachel Reeves, UK’s Chancellor of the Exchequer, has made it clear that these broad-based tax increases are necessary to keep the bond vigilantes happy, but since government is not as efficient as the private sector, Britain could now slide into a recession that would curtail growth and deepen its budget deficits.
According to European Central Bank (ECB) President Christine Lagarde, the European Union’s (EU) growth model is “geared towards a world that is gradually disappearing.” Lagarde said, “Exports have become a far less reliable engine of growth, reflecting the changing global landscape.” Then, Lagarde added, “Exports are projected to subtract from growth over the next two years.” Lagarde said the EU must quickly lower its internal barriers, which prevent businesses from offering goods and services in other countries without costly efforts to comply with local regulations. Lagarde failed to address the demographic decline in most EU countries, resulting in negative household formation and slow growth.
Despite ongoing labor market concerns, the Labor Department reported on Wednesday that new jobless claims declined to 216,000 in the latest week, which is the lowest weekly claims in over seven-months (since mid-April). The four-week moving average of weekly jobless claims also declined to 223,750.
On Tuesday, the Conference Board announced that its consumer confidence index plunged to 88.7 in November, down from a revised 95.5 in October. This is the largest drop in the past seven-months (since April). The labor market is now a big concern for many consumers, since the expectations component plunged 8.6-points to only 63.2 in September. Also notable is the present situation component fell 4.3-points to 126.9 in September. It seems obvious that the Fed must cut key interest rates on December 10th.
Some Other December Trends to Watch
In other news, President Trump is forecasting that U.S. tariff revenues will surge as bloated inventories are depleted. The U.S. has collected nearly $320-billion in tariffs so far this year, nearly doubling from the $170-billion at the same point in 2024. Commerce Secretary Howard Lutnick was at the Supreme Court hearing on tariffs and said that the Court was tough with its questions, but he fully anticipates the legality of tariffs will be upheld, and any higher tariff revenue should help reduce America’s budget deficit.
One potential surprise in the pipeline is the Trump administration’s proposal to end the war between Russia and Ukraine, despite criticism from the European Union. Both Ukrainian and American officials said they had made good progress in drafting a 19-point peace plan at their meeting in Geneva. Secretary of State Marco Rubio said he was “very optimistic” that an agreement could be reached fairly soon.
Finally, I must comment on the recent correction in Nvidia, which was basically an over-reaction to the news that Meta is in talks to spend billions on buying Google’s AI chips. This announcement caused Nvidia to decline on Tuesday on fears that Nvidia’s AI monopoly may be ending soon. This is an interesting theory, but so far there is no reaction from the analyst community, which is forecasting 66.4% annual sales growth and 70.9% forecasted earnings growth for Nvidia. Furthermore, the analyst community revised their consensus earnings estimate up 7% in the past seven-days for Nvidia!
By contrast, the analyst community is forecasting only 15.2% annual sales growth and 22% forecasted earnings growth for Google. The analyst community has not changed their earnings estimate for Google in the past seven-days, so there is no evidence that Google’s AI chip strategy is boosting its bottom line.
There are all kinds of low-grade AI chips out there, which I have discussed here and on Navellier Market Buzz with Paul Dlugosch from Natural Intelligence, but there is no evidence yet that Google’s chip can do the kinds of regenerative AI and machine learning which Nvidia’s Blackwell chip does so well.
Navellier & Associates; own Nvidia Corp (NVDA), Costco Wholesale Corporation (COST), Walmart (WMT), Alphabet Inc. Class A&C, (GOOGL), and Meta Platforms Inc Class A (META), in managed accounts. Louis Navellier and his family own Nvidia Corp (NVDA), Costco Wholesale Corporation (COST), and Walmart (WMT), via a Navellier managed account, and Nvidia Corp (NVDA), and Costco Wholesale Corporation (COST), in a personal account. They do not own Alphabet Inc. Class A&C, (GOOGL), and Meta Platforms Inc Class A (META), personally.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Most Market Indicators Point to a Rate Cut Next Week
Income Mail by Bryan Perry
Moving Toward More Domestic Manufacturing is Now a Must
Growth Mail by Gary Alexander
Keep an Eye on the “Other Dow” – the Transport Index
Global Mail by Ivan Martchev
November Ends Positive – Like the Flip of a Switch
Sector Spotlight by Jason Bodner
Thanksgiving Week Pushes November into the Green
View Full Archive
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