Gold surges to a new record high amidst increasing uncertainty across various sectors. According to Ole Hansen, head of commodity strategy at Saxo Bank, “the strong demand for ETFs remains a key driver, fueled by ‘FOMO’ and a declining trust in traditional safe havens.” He also noted that central bank purchases and dropping bond yields play significant roles in this trend.
The U.S. government shutdown took place last week, yet markets seemed unfazed. Although the closure of federal agencies has postponed critical economic reports, its impact isn’t apparent on Wall Street. All the major asset classes continued to show gains throughout the trading week ending October 3, as indicated by various ETFs.
The U.S. services sector stagnated in September, marking the slowest growth since 2020, according to the ISM Services Index. The index fell to a neutral reading of 50, indicating no growth. Furthermore, the employment segment of the ISM services index reflects a contraction in the labor force for the fourth consecutive month.
● The Mismeasurement of America: How Outdated Government Statistics Mask the Economic Struggle of Everyday Americans
Gene Ludwig
Review by Jared Bernstein via Washington Monthly
This disparity between economic data and everyday experiences is explored in Gene Ludwig’s book, a former comptroller of the currency during the Clinton administration. Focusing on unemployment, wages, inflation, and the increasing economic gap between high-earning and low-earning Americans, Ludwig asserts that the official statistics often misrepresent reality. He proposes a new set of indicators that more accurately reflect why many citizens feel worse about the economy than the government data suggests. [Bernstein is the former chairman of the United States Council of Economic Advisers under President Joe Biden.]
As the second day of the federal government shutdown unfolds, the anticipated non-farm payroll report for September has been postponed. The Bureau of Labor Statistics will not reopen until the shutdown ends, creating an information vacuum at a time when economic uncertainty is growing. The ongoing complexities from tariffs are making it even more challenging for the Federal Reserve to navigate monetary policy, increasing the risk of potential missteps. In light of this landscape, data from private sources and operational Federal Reserve banks are gaining importance. Here’s a summary of key economic updates released so far this week as the wait for official reports continues.
According to Challenger, Gray & Christmas, an outplacement firm, announced U.S. job cuts dropped by 37% in September compared to the previous month. However, year-to-date, the total number of announced cuts is at its highest since 2020. “Currently, we are witnessing a stagnating labor market, rising costs, and the transformative impact of new technologies. While anticipated rate cuts may stabilize the job market in the fourth quarter, other conditions could lead employers to continue layoffs or hesitate to hire,” noted Andy Challenger, the firm’s senior vice president.
Today’s update on the Global Market Index (GMI) projects a more than 7% annualized total return for the long-term outlook, based on the data through September. This estimate remains unchanged from the previous month’s analysis.
The ADP Employment Report indicates that U.S. companies have reduced their payrolls for a second consecutive month in September. This trend raises concerns for the labor market outlook. “Despite the strong economic growth witnessed in the second quarter, this report corroborates what we’ve observed in the labor market: U.S. employers are exercising caution with hiring,” stated ADP chief economist Nela Richardson.
In September, all major asset classes registered gains, extending a widespread rally witnessed recently. The results year-to-date indicate a consistent upward trajectory, as evidenced by a variety of proxy ETFs.
The U.S. government has shut down for the first time since 2019. Current indications suggest that a political compromise in Congress is unlikely, leaving the duration of the shutdown uncertain. The Senate is set to vote again today, likely on the same measures that failed earlier. Betting markets indicate there is a 79% chance that the shutdown will extend beyond five days.
