Good morning. This is Jeff Sparshott with the latest on the economy. You can send questions, comments and suggestions by replying to this email.

A surprise increase in November retail sales dispelled lingering pessimism about the economy and reinforced growing sentiment that the U.S. will beat inflation without paying the price in significantly weaker growth. Signaling a strong start to the holiday season, retail sales rose a seasonally adjusted 0.3% in November from the month before, the Commerce Department said Thursday. That was a rebound from October’s 0.2% decline and a surprise to economists who had expected sales to fall again last month, Austen Hufford and Sarah Nassauer report.

The data extended a week of positive readings for the U.S. economy. The unemployment rate fell in November, inflation cooled and the Federal Reserve pivoted Wednesday away from raising interest rates and toward considering when to cut them. The good tidings have ignited a rally on Wall Street, pushing the Dow Jones Industrial Average to a record high and caused yields on the 10-year Treasury note to fall below 4% on Thursday.

• Heard on the Street: Americans Are Spending on the Holidays After All (Read)
• Markets Cheer Fed Outlook, but the Rally Complicates It (Read)

The Federal Reserve Bank of New York's Empire State manufacturing survey is expected to fall to 4 in December from 9.1 one month earlier. (8:30 a.m. ET)

U.S. industrial production for November is expected to rise 0.3% from the prior month. (9:15 a.m. ET)

S&P Global's preliminary U.S. manufacturing index for December is expected to tick up to 49.5 from a final reading of 49.4 in November. The services index is forecast to inch down to 50.7 from 50.8. (9:45 a.m. ET)

The Baker Hughes rig count is out at 1 p.m. ET.

The European Central Bank and the Bank of England held interest rates steady as rich countries’ central banks begin to reposition themselves for a world in which inflation is under control. The shift marks a turning point for a global economy that for months had been laboring under high interest rates, high inflation and—outside the U.S.—low growth amid heightened geopolitical uncertainties, Tom Fairless and Paul Hannon write.

At the end of last year, investors thought a recession was a done deal. The year before, they thought big tech would be immune to rate increases. And a year before that, they were convinced that paying high prices for stocks popular with the wider public would make them rich. This December, they believe, again with absolute conviction, that the economy is heading for a soft landing and lower interest rates. Could they finally be right? Maybe. But WSJ's James Mackintosh is surprised that there seems to be so little concern that a slow-growing economy will turn into something worse, or that inflation proves stickier than expected.

Mortgage rates dropped below 7% for the first time since August. The average rate on the standard 30-year fixed mortgage fell to 6.95%, according to mortgage-finance giant Freddie Mac. That could help breathe life into the beaten-down housing market, which is the part of the economy where the Federal Reserve’s rate hikes have stung Americans the most, Gina Heeb reports.

U.S. jobless claims fell last week and remain at historically low levels, suggesting that companies are holding onto workers as the economy chugs along. First-time claims, a proxy for layoffs, dropped by 19,000 to 202,000, the Labor Department said, their lowest level since October.

Continuing claims, which reflect the number of people receiving unemployment benefits for more than a week, have been trending higher. The four-week moving average, which smooths out weekly volatility, is at the highest level since late 2021. "The rapid increase in continuing claims in October through early December is an indication that recently laid-off workers are taking a somewhat longer time to find a new job," economists at PNC Financial Services said.

Over the past decade, a number of alarming stories have chronicled the decline of U.S. life expectancy amid rising overdose deaths, Covid-19, alcohol-related deaths and suicides. It turns out there are two ways to measure mortality and life expectancy, and the one you hear about the most paints a misleadingly pessimistic picture of the future. WSJ's Josh Zumbrun examines the difference between period life expectancy and cohort life expectancy—and why we should expect children born this year to live longer than children born in any previous year.

Building China-free supply chains is tough. Sometimes it means dealing with lizards that don’t have legs and sands that are radioactive. That is the case with making rare-earth magnets—a powerful piece of tech that is as crucial to jet fighters and wind turbines as it is to smartphones and electric cars. For decades, China has dominated every step in the process of making rare-earth magnets. It is the only nation capable of producing the magnets from start to finish at scale. WSJ's Jon Emont looks at the companies stitching together globe-spanning supply chains—and the obstacles they encounter as they attempt to break China’s grip on the market.

• China’s Economy Shows Signs of Losing Further Momentum (Read)

Miners are struggling to get enough uranium out of the ground. That is helping to push prices of the nuclear fuel to nearly 16-year highs. The price for U3O8, a lightly processed concentrate known as yellowcake, this week climbed to its highest price since the start of 2008, Rhiannon Hoyle reports.

• Oil-Demand Growth to Weaken Next Year, IEA Says (Read)

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Real Time Economics comes to you from WSJ reporters and editors around the world. Today's issue was curated and edited by Jeff Sparshott (@jeffsparshott) and Greg Ip (@greg_ip) in Washington, D.C., and editors in London.

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