This year has seen some positive turnarounds in the U.S. economy, especially in the second quarter. The latest preliminary GDP estimate indicates a 2.3% growth in economic output compared to the previous quarter, marking a notably better performance than the lackluster 0.6% increase during the first quarter. While this growth rate is modest, it represents a significant improvement and suggests a recovering economic landscape.

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The regular updates will take a brief pause as The Capital Spectator embarks on a holiday to Bermuda. Your maritime editor will return as a land-dweller on Monday, August 3, when the focus on macroeconomic issues and finance will resume.

Wishing clear skies and fair winds to everyone!

● The Global Economy in Turbulent Times
By See-Yan Lin
Summary via publisher (Wiley)
In this insightful work, Harvard economist Dr. See-Yan Lin shares his perspectives on crucial economic issues today. Adapted from his highly-regarded column in the Malaysia Star newspaper, the chapters provide engaging and informative insights into ongoing global economic challenges. Dr. Lin analyzes the world economy with a keen focus on the U.S., EU, Japan, and the international monetary system, revealing the flaws and suggesting various avenues for improvement. Key topics include the emerging East Asia region, ASEAN (particularly Malaysia), and BRICS nations, along with the author’s thoughts on global demographics, the importance of quality education, and corporate governance in Malaysia, among others.
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Manufacturing activity saw an uptick this month, according to the July flash estimate of the purchasing managers’ index (PMI). This sentiment gauge rose to 53.8, up from June’s 53.6, which was a 20-month low. Any reading above the neutral mark of 50 indicates growth. While the current data suggests a relatively subdued performance compared to last year, it also indicates that manufacturing remains in an expansion phase, albeit at a slower rate.
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The upcoming “advance” GDP report, set to be released on July 30, is expected to show an increase of 1.9% for the second quarter (seasonally adjusted annual rate), reflecting an average estimate derived from The Capital Spectator’s various econometric forecasts. This updated average forecast, which exceeds last month’s estimate for Q2, signifies a notable recovery following a 0.2% decline in Q1.
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At this juncture, concrete data for assessing the U.S. economy in July is limited. However, preliminary figures suggest that growth will persist, and the recent stagnation in the manufacturing sector may yield to a more robust trend. We await today’s early July data for the U.S. manufacturing purchasing managers index (PMI), which is anticipated to be released at 9:45 AM eastern time. The consensus forecast suggests a slight uptick in the moderate growth rate from June, as per Econoday.com. Meanwhile, the available figures for July so far imply that the strong growth observed in June may continue into this month.
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● U.S. jobless claims have fallen to the lowest level since 1973…
● The U.S. leading index has risen more than anticipated in June…
● The Chicago Fed National Activity Index has rebounded in June…
● On the downside, Bloomberg’s Consumer Comfort Index is reported to have slid to a five-week low…
● The Flash Eurozone Composite PMI dipped in July, though it remains near a four-year high…
● Meanwhile, the China Manufacturing PMI indicates another month of contraction in July.

The three-month average of the Chicago Fed National Activity Index (CFNAI-MA3) improved to -0.01 in June, indicating that U.S. economic growth is effectively aligning with the historical trend rate (a reading of zero). This marks the third consecutive month of slight growth in economic activity, according to the report released today by the Chicago Fed. The revised figures for last month “indicate that national economic activity was very close to the historical trend,” as noted in a press release from the bank.
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The housing market continues to show signs of recovery following a slow first quarter. Recently released data indicated a stronger-than-expected surge in existing home sales. In June, purchases increased to a new post-recession, seasonally adjusted high of 5.49 million units—the fastest growth in over eight years. This positive development follows last week’s favorable news about new residential construction in June approaching a post-recession high, along with builder sentiment nearing a ten-year peak this month.
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● U.S. existing home sales in June increased at the fastest pace in over eight years…
● U.S. house prices rose by 5.7% for the twelve months ending in May…
● Demand for U.S. mortgage applications increased for the week ending July 17…
● The 30-year Treasury yield fell to a near two-week low…
● UK retail spending showed unexpected weakness in June…
● The Greek Parliament approved additional reforms for the bailout package.