US housing starts show signs of stagnation in September. The construction of residential properties decreased by 0.5% to 1.35 million units last month, nearing the lowest figures observed during the peak of the pandemic. Sal Guatieri, a senior economist at BMO Capital Markets, states that “affordability remains a significant concern in many areas, and as a result, home construction will likely stagnate until the Federal Reserve embarks on a more substantial easing cycle and mortgage rates decline by an additional percentage point.”
● The Art of Uncertainty: How to Navigate Chance, Ignorance, Risk and Luck
David Spiegelhalter
Review via The Economist
Books that convey the thinking of mathematicians while being accessible to non-experts are a valuable rarity. For many years, enthusiastic learners have turned to Thomas Körner’s “The Pleasures of Counting” (1996) and Sir Timothy Gowers’s “Mathematics: A Very Short Introduction” (2002). Sir David Spiegelhalter, an emeritus professor of statistics at the University of Cambridge, adds to this tradition with his latest book “The Art of Uncertainty,” which delves into universally relevant topics of chance, ignorance, and risk analysis.
Recent economic updates have prompted an increase in CapitalSpectator.com’s median growth prediction for the forthcoming third-quarter GDP report. By evaluating various data sources to create a median nowcast, the latest revision indicates a modestly stronger expansion compared to the solid growth seen in Q2.
US retail sales have risen for a third consecutive month in September, surpassing expectations. Spending increased by 0.4% last month, reflecting a notable rise compared to the sluggish 0.1% increase in August. Mark Streiber, an economic analyst at FHN Financial, comments that “strong retail spending last month indicates robust recovery through the end of the third quarter.”
The recent rally of the Russell 2000 Index, a prominent gauge of small-cap stocks, has renewed optimism among investors that this segment of the equity market is on the brink of a recovery after an extended period of underperformance. However, similar hopes have emerged in the past, leading to skepticism about whether this time will indeed be different. Currently, the supporting evidence remains somewhat limited.
A prospective second Trump administration could significantly alter global trade dynamics, as reported by The Wall Street Journal. The former president has indicated that, if re-elected, he would impose increased trade tariffs, potentially reaching levels not seen since the 1930s. Such measures would represent a stark reversal from decades of policy that favored a free-trade approach in the global economy.
The US economy continues to defy the recession projections that flourished last summer. Key factors contributing to this resilience include solid growth in employment and robust consumer spending. In contrast, industrial production, which performed well as the pandemic-related recession came to an end, has recently stumbled. Adding to concerns, the pace of personal income recovery has been one of the weakest recorded during expansion periods since 1970.
The IMF anticipates that electricity demand worldwide will outpace overall energy demand in the coming decade, as outlined in the agency’s annual World Energy Outlook. Factors driving this increase include the growth of electric vehicles, air conditioning systems, and data centers.
Concerns regarding a potential US recession in the near future have diminished recently, though discussions around rate cuts persist. The interplay of a strong economy alongside expectations of monetary easing has raised some eyebrows among analysts. Federal Reserve Governor Christopher Waller clarified on Monday that the central bank continues to foresee further easing in monetary policy as likely. He noted that, while cuts may be less aggressive, they are still expected, reflecting a response to the latest economic data. However, hawkish observers seeking a definitive indication that cuts may be off the table were left unsatisfied after Waller’s address at Stanford University.
Federal Reserve Governor Christopher Waller states that future interest rate cuts will be less aggressive. He referenced recent economic reports and advised that “the data is indicating the economy may not be slowing as much as we would prefer… While we should exercise caution regarding this data, I believe the overall picture suggests that monetary policy should proceed with more care regarding the pace of rate cuts than was necessary at the September meeting.” Meanwhile, the US 2-year Treasury yield shows continued trading around the 4% mark.
