USA Outlook, August 22 to August 26, 2022

Weekly newsletter August 22 to August 26

August 22, 2022

August 23, 2022

US business activity falls at its fastest rate since May 2020 Business activity at private US companies in early August dropped off at some of the sharpest rates seen since the beginning of the pandemic as rising interest rates and high inflation crimped consumer spending, according to data released Tuesday. The latest S&P Global preliminary flash composite purchasing managers index, or PMI, registered a level of 45 as of August 22, down from 47.7 in July.

Photo: CNBC

European markets close lower as rate hike fears resurface, euro hits dollar parity European markets closed lower on Monday as fears of more aggressive interest rate hikes from the Federal Reserve and the European Central Bank returned to the fore. The pan-European Stoxx 600 provisionally ended down 1%, with autos falling 3.9% to lead losses as almost all sectors and major bourses traded in negative territory.

The rate at which business activity slowed was the fastest recorded since May 2020 when the pandemic shutdowns first took hold, according to S&P Global. This marks five consecutive months that the activity index has fallen and the second consecutive month that it has been in contraction territory.

The contraction was particularly deep amongst service-sector firms, with the S&P Global Services Business activity index landing at 44.1 in August, down from a 47.3 reading in July. The manufacturing index dropped from 52.2 in July to 51.3 in August -- a two-year low.

Risk sentiment was dampened by hawkish signals from ECB policymakers, with Bundesbank President Joachim Nagel telling a German newspaper that the ECB must continue hiking interest rates even as recession risks in Germany grow.

U.S. stocks fell in early trade after the S&P 500 snapped a four-week winning streak on Friday, as Wall Street looks ahead to Fed Chairman Jerome Powell’s Friday comments on inflation at the central bank’s annual Jackson Hole economic symposium.

Photo: CNN Source: https://www.cnbc.com/2022/08/22/europe-markets-open-to-close-fed-hike-fearsjackson-hole-in-focus.html

Source: https://us.cnn.com/2022/08/23/economy/pmi-sp-august-flash-business-activity

August 24, 2022

August 25, 2022

Second-quarter GDP declined less than previously thought, but the economy is still shrinking The US economy shrank at a slightly slower rate than estimated during the second quarter, according to updated data released Thursday by the US Bureau of Economic Analysis. The nation's gross domestic product -- the broadest measure of economic activity -- shrank 0.6% at an annualized rate from April through June. The activity was revised upward from the advanced estimate released in July, which showed a 0.9% decline.

Photo: US News

Pending home sales slip slightly in July but not as much as expected Pending home sales fell 1% in July, set back by rising mortgage rates and prices, in yet another indication the pandemic-era housing boom has ended, the National Association of Realtors reported on Wednesday. The dip was below forecasts of a 2.5% drop and well below the 8.9% decline in June, originally estimated at 8.6%.

After posting record sales levels and prices during the pandemic, the housing sector has now slowed significantly for both new and existing homes. On Tuesday, the Census Bureau said that new home sales fell 12.6% in July and are down 29.6% from a year ago. Meanwhile, inventories of homes are starting to build.

Despite the upward revision, the latest estimates show an economy that has been contracting for two consecutive quarters, a threshold that's generally considered an unofficial indicator of a recession (the official arbiter is a panel of National Bureau of Economic Research economists, who take an array of economic indicators into consideration).

Many economists, however, don't believe the US is during a recession. They point to the strong labor market and heightened levels of consumer and business spending, production, and income.

Second-quarter gross domestic income, an alternative economic measure that gauge’s incomes earned.

Housing is a key component of the economy and along with the job market slowing a bit, it could have broader implications for the Fed going forward. While there has been some data showing inflation may have peaked in the second quarter, the question is whether the Fed will want to keep raising interest rates to reach its stated target of an annual inflation rate of 2%.

Photo: Clayton News Daily

Source: https://www.usnews.com/news/economy/articles/2022-08-24/pending-home-salesslip-slightly-in-july-but-not-as-much-as-expected

Source: https://edition.cnn.com/2022/08/25/economy/us-gdp-q2-2022-secondestimate/index.html

August 25, 2022

Photo: CBS News

Record number of women are running for governor and winning their primaries.

Voters in 36 states will be heading to the polls this November to elect their governors, and in a year where state leaders have been in the spotlight as they address some of the most pressing issues — COVID-19 and abortion, for instance — a record number of women are running for the job. Now, as the primary season draws to a close in the next few weeks, a record number of women are winning their party's nomination.

Sixty-nine women filed to run for governor in 2022, surpassing the previous record of 61, set in 2018. So far, 23 have won their primaries, according to the Center for American Women and Politics, which tracks women candidates. The previous record was also set in 2018 when 16 women won their primaries.

This year has not just seen a record number of women gubernatorial nominees to date, there is also a record number of women running against other women at the top of the ticket. In four instances ever, both major party nominees have been women. This year, there are five governor's races in which both major-party nominees are women. Now, even more women are positioned to run for higher office after a major increase in the number of women serving in state legislatures in 2018.

Source: https://www.cbsnews.com/news/record-number-of-women-are-running-forgovernor-and-winning-their-primaries/