10 Things You Need To Know: September 12, 2023
Key data releases this week include: NFIB Small Business Optimism (Tue), CPI (Wed), retail sales (Thu), PPI (Thu), industrial production (Thu), and consumer sentiment (Fri).
Haver
September 5, 2023
Service sector business activity in the U.S. economy increased last month. The ISM Services PMI rose to 54.5 in August, more than reversing the dip in July, and reaching a six-month high. The August figure was well above the Action Economics Forecast Survey expectation of 52.9.
Bloomberg
September 6, 2023
Growth in the US economy and jobs market slowed in July and August, and many businesses expect wage increases to ease broadly in the near term, the Federal Reserve said in its Beige Book survey of regional business contacts. “Contacts from most districts indicated economic growth was modest,” the Fed said Wednesday in the report.
Bloomberg
September 10, 2023
Niall Ferguson, noted British historian and Harvard professor, argues that a war between the US and China would have a devastating impact on global trade. He estimates that the war could disrupt $5 trillion in annual trade, which would lead to job losses and economic hardship around the world. It could cost the global economy $2 trillion in lost output, according to Ferguson.
Barron’s
September 11, 2023
FactSet shows that aggregate S&P 500 earnings per share are expected to grow almost 12% next year, to $248, as sales recover, and profit margins rise. Putting a multiple of 19.8 on those earnings—where the S&P 500 had traded at earlier this year—would put the index at 4910 by the end of this year, up 10% from Friday’s close and at a record high.
CNBC, Bloomberg, Marketplace
September 6, 2023, September 7, 2023, September 7, 2023
Federal Reserve Bank of NY President John Williams indicated that monetary policy is currently “in a good place” and Susan Collins, president of the Boston Federal Reserve Bank, advised a careful, patient approach. Meanwhile, Chicago Fed President Austan Goolsbee said that the central bank is quickly nearing a time when the discussion will be about how long to keep rates elevated rather than about whether to raise them again.
Reuters
September 8, 2023
Federal Reserve data reveals that US household wealth surged to an all-time high of over $154 trillion in the second quarter, a 3.7% increase from Q1. The stock market’s robust performance and a rebound in real estate values were the primary drivers behind the growth, even as households’ cash reserves continued to dwindle, dropping to $17.7 trillion.
Capital Economics
September 11, 2023
The recent weakness of Gross Domestic Income (GDI) paints a much weaker picture of recent economic performance than GDP. As GDI has historically provided the more accurate steer to true economic conditions, there is a risk that GDP is currently overstating the health of the economy.
Bloomberg
September 10, 2023
A strike against General Motors, Ford, and Stellantis of just 10 days would reduce US gross domestic product by $5.6 billion and likely push the Michigan economy into a recession, according to Anderson Economic Group, an economic consultancy. It could also make some car models scarce and push prices up after they started coming down from record levels.
Capital Economics
September 8, 2023
Commodity prices will remain buffeted by weak global economic growth and a strong dollar, at a time of mounting supply risks and some policy stimulus in China. The backdrop for commodity prices looks more positive in 2024. Demand should receive a boost as developed economy central banks embark on monetary easing. We also expect the US dollar to slip back and risk appetite to improve. That said, subdued growth in China will remain a headwind.