Recent predictions suggesting an imminent recession in the U.S. may be misguided. While it is essential to recognize various lurking risks that could threaten future economic growth, recent data indicates that modest expansion is still occurring.
In August, U.S. retail sales experienced an unexpected rise, contradicting forecasts of a decline. The modest monthly growth of 0.1% follows a robust 1.0% increase in July. “August’s retail sales data, which surpassed expectations, indicate that thanks to significant wealth accumulation and lower energy prices, consumers are still willing to spend despite a slowdown in the labor market,” reports Capital Economics North America economist Olivia Cross.
As we approach the anticipated interest rate cut by the Federal Reserve on Wednesday, September 18, it seems we are on the brink of a significant shift in monetary policy. With this forthcoming change, it is a fitting time to evaluate trailing payout rates across the major asset classes, as assessed through various ETFs.
The U.S. economy is at an “important turning point,” claims the White House’s chief economic advisor. “Inflation has returned to levels close to those seen before the pandemic, making it crucial to protect the significant progress we’ve achieved in the labor market,” states Lael Brainard, the White House National Economic Advisor.Additionally, the New York Fed Manufacturing Index illustrates a notable recovery in business activity for September. “For the first time in almost a year, business activity grew in New York State, as reported by firms participating in the September 2024 Empire State Manufacturing Survey,” according to the bank’s report. “New orders increased, and shipments saw significant growth.”
The Federal Reserve is anticipated to reduce interest rates this week. However, the key question remains: has the bond market fully adjusted to the potential onset of policy easing?
Expect a busy week ahead in terms of central bank decisions, including the Federal Reserve’s expected announcement of a rate cut on Wednesday, September 18. Other central banks in Brazil, England, Norway, and South Africa will also hold policy meetings this week. “We’re entering a phase of rate cuts,” says John Bilton, global head of multi-asset strategy at JP Morgan Asset Management.The U.S. 10-year Treasury yield closed last week at 3.66%, hovering near its lowest level since June 2023. The recent decline in this benchmark rate aligns with the prevailing belief that the Federal Reserve will announce a reduction on Wednesday (September 18). Fed funds futures suggest uncertainty, estimating close to a 50/50 chance between a 0.25-point or a 0.50-point rate cut.
● Punishing Putin: Inside the Global Economic War to Bring Down Russia
Stephanie Baker
Interview with author via Marketplace.org
Since the start of the Ukraine conflict, Russia has faced severe economic isolation, with over 20,000 sanctions and restrictions implemented against it, as reported by Stephanie Baker, an investigative journalist at Bloomberg News. Major companies, including McDonald’s and Starbucks, have exited the Russian market. Countries have collectively agreed on a price cap for Russian oil to diminish the nation’s energy income. Despite the unprecedented scope of sanctions targeting an economy of Russia’s magnitude, their effectiveness is still debated. Baker, author of the new book “Punishing Putin: Inside the Global Economic War to Bring Down Russia,” argues that the success of these measures depends heavily on what metrics one uses to define success.
The latest estimates of U.S. economic activity ahead of the third-quarter GDP report point to a growth rate that, while slower, remains solid, according to compiled data from CapitalSpectator.com.
U.S. jobless claims saw a slight uptick last week, yet they remain within a relatively average range compared to the last two years. This leading indicator continues to suggest an optimistic outlook for the labor market. “After some fluctuations earlier in the summer, initial jobless claims have stabilized over the past several weeks,” notes Nancy Vanden Houten, lead U.S. economist at Oxford Economics. Historically, unemployment claims have remained at low levels.
The premium for the U.S. 10-year Treasury yield decreased further in August relative to the “fair value” estimate as defined by a model developed by CapitalSpectator.com. Although the market yield remains somewhat above the model’s projected value, the unusually high premium that had been observed is beginning to normalize.
In this revised article, trends in the U.S. economy are discussed, particularly regarding growth forecasts, retail sales, and the Federal Reserve’s anticipated decision on interest rates. The overall tone maintains an analytical view, outlining both optimism and caution while assessing various employment and economic indicators.
