The Week in Review: November 22, 2021
Stepping on the Gas in the Fourth Quarter
GDP, which is the largest measure of economic activity, slowed sharply in Q3. But as the fourth quarter gets underway, early reports are suggesting a significant pickup in activity.
Let’s review several key stats.
As of November 17, the Atlanta Fed’s GDPNow Model, which incorporates economic data as it is released, is tracking growth at a fast-paced 8.2% rate. As of November 18, Moody’s High Frequency Model is tracking at 8.0%. Q3 expanded by 2.0% (U.S. BEA).
First-time claims for unemployment benefits have fallen nearly 100,000 over the last seven weeks to a pandemic low of 268,000, according to the Dept of Labor. Anything south of 300,000 is low.
The Institute for Supply Management said its closely followed ISM Services Index hit an all-time high in October, suggesting activity in the broad service sector is strong.
The Conference Board reported its Leading Index jumped 0.9% in October. It said gains were widespread among its ten components. The index, which is designed to foreshadow short- and medium-term trends, has posted robust gains in seven of the last eight months.
The U.S. Census Bureau reported retail sales surged 1.7% in October. Some of the increase was due to higher prices. Still, it’s a substantial move.
What’s going on? Thanks to fiscal-stimulus checks, generous unemployment benefits, business loans, paycheck protection loans, and massive intervention by the Federal Reserve, consumers have plenty of cash to spend. It appears to be fueling economic growth.
But the trade-off for super-fast growth has been higher inflation.
Growth may moderate as we move through the quarter, and some of the excess cash may remain in rainy day funds. Maybe fear of higher prices is driving some to accelerate purchases, as they hope to beat potential price hikes. But for now, worries about inflation aren’t slowing spending or the economy.
Have a happy and joyful Thanksgiving holiday!
If you have any questions or concerns, please don’t hesitate to let me know.
Two for the Road
From 1999 to 2021, the total debt burden for Americans over the age of 70 increased 614% to $1.27 trillion. Today, roughly 46% of all Americans expect to retire in debt. - CNBC, November 16, 2021
The Social Security trust funds hold almost $2.9 trillion of the United States’ $28.4 trillion debt—more than the combined holdings of our top two foreign creditors, Japan ($1.3 trillion) and China ($1.1 trillion). So while many people believe that much of the U.S. national debt is owed to foreign countries, the truth is, most of it is owed to Social Security and pension funds right here in the U.S. This means U.S. citizens own most of the national debt. - The Balance, October 8, 2021
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