Retail spending in America rose at its strongest pace in three months in December, as consumers set aside any worries about inflation and interest rates, and filled their shopping carts for the holidays. US retail sales, which are adjusted for seasonal differences, but not for inflation, rose by 0.6% in December, compared to the month before – a notable jump from the 0.3% pace seen in November and considerably more than the 0.4% expected by economists. It seemed like a fitting end to a year when surprising economic resilience was a theme, mostly fuelled by Americans’ continued willingness to spend. It suggests that the US consumer is entering 2024 in good shape.

In a sign of the times, Microsoft overtook Apple as the world’s most valuable company. Although the Word-famous software giant has briefly taken the lead a handful of times since 2018, investors expect it to hang onto the crown this time around, bolstered by the firm’s expanding venture into AI. Microsoft, of course, has a big stake in ChatGPT-maker OpenAI, and has funnelled cash into research and development, industry partnerships, and strategic acquisitions of firms like LinkedIn and GitHub, all in the pursuit of data and AI expertise. This has paid off: Microsoft has successfully rolled out AI solutions across its own business and has turned its Azure division into the go-to cloud service for AI-curious companies.

Inflation in Britain unexpectedly found new heat in December for the first time in ten months, prompting traders to scale back their aggressive bets on lower interest rates. Consumer prices increased by 4% last month from a year ago – up from a 3.9% rise in November. Economists were expecting a small dip to 3.8%. Services inflation, which is closely monitored by the central bank as a more telling measure of price pressures at home, also climbed, to 6.4%, from the previous 6.3%. Finally, core inflation, which excludes volatile food and energy prices, held steady at 5.1%, bucking expectations for a fall.

This inflation uptick comes despite a notable slowdown in wage growth toward the end of last year. Average annual growth in regular earnings, excluding bonuses, in the UK was 6.6% in the three months to November – in line with expectations and a fall from the downwardly revised 7.2% in the period through October. Annual growth in total pay, meanwhile, slowed to 6.5% after hitting a record 8.5% in July. With the pace of consumer price gains falling more quickly, earnings continued to grow in real (i.e. inflation-adjusted) terms, easing the tight financial squeeze on the British that has prevailed over the past two years.

The Chinese economy grew by 5.2% last year – a marked improvement from its meagre 3% growth in 2022, when it was under the government’s strict zero-Covid restrictions. Last year’s growth matched economists’ forecasts but exceeded the government’s official target of “around 5%”, which was its lowest goal in decades. The real estate sector, which has been plagued by a debt crisis for three years, remained in distress throughout 2023. Investment in property development dropped by 9.6% last year compared to the one before, while new home prices slid 0.4% in December from the previous month – the steepest decline since February 2015.

Adding to China's problems, its population continued a historic decline in 2023, with the number of people in the country falling for the second year in a row, to 1.41 billion. It was a drop of over 2 million people – about twice the decline seen a year earlier when the Chinese population shrank for the first time since 1961. The country saw 11.1 million deaths in 2023, the most since 1960, and saw the number of births drop to a record low of nine million. China’s shrinking – and rapidly aging – population is expected to bring further troubles to the country’s flagging economy, in part by shrinking the size of the workforce that drives growth and funds pension systems.