Two surveys on manufacturing showed positive results in September. However significant concerns remain regarding the tight labor market and rising input-cost pressures.
Housing starts rose by 9.2 percent in August. However, housing permits, an indicator of future activity, fell in the latest month, hitting the lowest level since August 2016. Combined with rising interest rates and falling affordability, the outlook for housing is deteriorating.
Consumer Sentiment jumped in early September while retail sales and industrial production both posted modest gains though with mixed results among the details. Overall, the three reports suggest solid growth trends, supporting a positive outlook.
The small-business-optimism index from the National Federation of Independent Business jumped to 108.8 in August, a new all-time high. Job openings also reached a new all-time high. Combined, these reports indicate on-going economic strength and support a positive outlook over the coming months and quarters.
"A crucial reason why monetary and fiscal planners fail traces to the indicators they use as the signposts for what they may need to do are themselves false signals hiding from view the reality of the complex market system." ~ Richard Ebeling
U.S. nonfarm payrolls added 201,000 jobs in August bringing 12-month total to 2.33 million new jobs while hourly earnings rose 0.4 percent for a 12-month gain of 2.9 percent, the fastest since 2009. Broad-based gains in the labor market are providing support for consumer confidence, consumer spending, and the economy overall.
The ISM’s nonmanufacturing index rose to a reading of 58.5 from 55.7 in July. The results suggest the nonmanufacturing sector continued to grow in August. That performance is in line with the report for the manufacturing sector and other recent data that point to ongoing expansion for the overall economy.
The Manufacturing Purchasing Managers’ Index registered a 61.3 reading in August, the highest reading since 2004. All five components of the PMI showed stronger readings in the latest month. Today’s report suggests a positive outlook for manufacturing.
Personal income rose 0.3 percent in July while total personal consumption expenditures (PCE) rose 0.4 percent. Gains in disposable income should provide support for future increases in spending and suggest a positive outlook for the economy.
A new recession would not only mean lower or even negative economic growth rates, it would also induce governments to increase public spending. Then, the public debt quotient (debt over gross domestic product) would rise because of a lower denominator and a higher numerator. With the interest rate at historical lows, and the debt ratios already at the point of fiscal unsustainability, there is no space for a new stimulus.
Revised estimates show the U.S. economy grew at a 4.2 percent annual rate in the second quarter while after-tax profits rose 3.7 percent to a record $1,968.5 billion at an annual rate.
Consumer Confidence rose for the second month in a row, to the highest level since October 2000. Overall, consumer attitudes remain at historically favorable levels, suggesting support for future gains in consumer spending and overall economic growth.
New orders for durable goods fell 0.2 percent in July, however, excluding aircraft, orders jumped 1.3 percent to a record high. The data suggest that demand remains strong and that the outlook for the economy remains positive.
Sales of new single-family homes fell 1.7 percent in July. Slowing sales are coinciding with slowing construction suggesting new-home building is unlikely to contribute significantly to growth in coming quarters.
The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics shows the number of open positions in the private sector was essentially unchanged in June, holding at a very high level. Overall, the data relating to the labor market continue to show strength.