THE ECONOMY

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THE ECONOMY

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MARKETWATCH

"Another inflation gauge is set to enter the red zone, but no worries at the Fed. Here’s why"


By Jeffry Bartash

Published: Aug 26, 2018 8:22 a.m. ET

Federal Reserve Chairman Jerome Powell is watching inflation closely, but the former Wall Street risk manager says gradually rising inflation is not sufficient cause to raise U.S. interest rates.

Yet another key measure of U.S. inflation could soon hit the highest level in six years, but don’t expect the head honcho at the Federal Reserve to get uptight.

A barometer of inflation that strips out food and energy is likely to reach 2% for the first time since 2012.

Known as core PCE, it’s one of the two inflation gauges the Fed follows the closest and plays a big role in determining when the central bank raises the cost of borrowing.

The headline PCE number, which includes food and energy, breached 2% in the early spring and is already at the highest level in six years.

These inflation figures are included in the monthly report on consumer spending that will be issued Thursday.

Rising inflation used to make Fed bigwigs quiver in their boots and move fast to pour cold water on the economy through higher interest rates.

That’s no longer the case, though.


Starting in the early 1990s and continuing through the slow economic recovery of the past decade, the Fed has been more willing to keep interest rates low.

Automation, the Internet, cheap Chinese labor and other factors have worked to produce a remarkable era of weak inflation both in the U.S. and abroad.

Inflation in the U.S. has topped 4% only once since 1991, and just briefly, in 2008 when the economy was plunging into the worst downturn since the Great Depression three-quarters of a century earlier.

For the most part it’s hovered between 2% and 3% and as recently as three years ago inflation was effectively zero.

In a major speech last week, Powell suggested that changes in the level of inflation were no longer as useful in helping the Fed to decide when to raise interest rates.

He argued the Fed needs to adopt a more sophisticated “risk management” strategy that looks “beyond inflation for signs of excesses” in the economy.


Signs of excesses aren’t all that obvious — partly why the yield on the 10-year Treasury note is surprisingly still stuck below 3%.

Stock indexes such as the S&P 500 and Nasdaq Composite are even pushing back into record territory.

Consider the ultra-tight labor market.

The unemployment rate keeps falling and now sits at a nearly 20-year low of 3.9%, but worker pay is still rising less than 3% a year.

And while companies say they have to pay more for raw materials and transportation costs owing to tariffs and other shortages, they’ve had trouble passing on price increases to customers reluctant to pay them.

Inflation as measured by the PCE would likely have to move rapidly toward 2.5% or 3% to force the Fed to cast aside Powell’s gradualist approach to raising interest rates.

Even then, Powell insists, it would have to be clear to the Fed that shifting inflation is not merely a temporary phenomenon.

For all his avowed “caution,” though, Powell is on board for at least several more increases in the Fed’s benchmark short-term interest rate.

The central bank appears locked in on a rate hike at its next big meeting in late September.

The so-called fed funds rate is slated to rise to a range of 2% to 2.25% from its current 1.75% to 2% target.

Eventually the Fed expects to end up around 3%.

Still, the Fed is moving more at a turtle’s pace than that of a hare.

No worries there.

“The speech was largely a spirited defense of the Fed’s slow-but-oh-so-steady rate hikes,” said Doug Porter, chief economist at BMO Capital Markets.

https://www.marketwatch.com/story/anoth ... 2018-08-26
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Re: THE ECONOMY

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FOR THE RECORD, THE INTERNET BOOM IN THE 1990s LED TO THE DOT.COM CRASH AROUND 2000 ...

MARKETWATCH

"Americans haven’t been this confident in the economy since 1990s Internet boom"


By Jeffry Bartash

Published: Aug 28, 2018 10:25 a.m. ET

The numbers:

Consumer confidence in the United States soared in August to an 18-year high and hit seldom-reached peaks, reflecting surging growth in the economy and the lowest unemployment rate in almost two decades.

The consumer confidence index jumped to 133.4 from a revised 127.9 in July, the Conference Board said Tuesday.

How good is that?

It’s the highest level since October 2000 and beats the previous postrecession peak of 130 in February.

The only other period in which consumer confidence was higher was during the Internet-fueled boom of 1997 to 2000, based on official monthly readings that go back to 1977.

The index was also higher in the mid-1960s, but the survey was only conducted every two months for the first decade of its existence.

What happened:

The present situation index, a measure of current conditions, climbed to 172.2 from 166.1.

That’s also the highest level since 2000.

The future expectations index advanced to 107.6 from 102.4

Big picture:

Americans have rarely felt this good about the economy.

Millions of people have found work, layoffs have fallen to levels last seen in the late 1960s, incomes are rising and businesses are investing.

The U.S. economy expanded at a lusty 4.1% annual clip in the second quarter.

What they are saying?

“Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term,” said Lynn Franco, director of economic indicators at board.

Market reaction:

The Dow Jones Industrial Average and the S&P 500 both rose in Tuesday trades, with the S&P hitting another record.

The stock market has surged after President Trump announced a pending new free-trade deal with Mexico.

The 10-year Treasury yield rose to 2.88% to extend a recent upswing.

Bond yields had climbed to as high 3% earlier this year before retreating.

https://www.marketwatch.com/story/consu ... 2018-08-28
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Re: THE ECONOMY

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MARKETWATCH

"U.S. trade deficit widens in July to highest in five months"


By Greg Robb

Published: Aug 28, 2018 10:11 a.m. ET

The numbers:

An early look at trade patterns in July showed a widening in the nation’s trade deficit to the highest level in five months, perhaps a sign that growth will slow down a little in the third quarter from the torrid pace in the April-June period.

The trade gap in goods — services are excluded — rose 6.3% to $72.2 billion from a revised $67.9 billion in June, the government said Tuesday.


That’s the highest rate since February.

Economists were looking for the deficit to widen somewhat less, to $69.4 billion.

The government will release overall trade numbers next week, but the size of the deficit is tied to changes in exports and imports of goods.

Services don’t change much month to month.

An advanced look at wholesale inventories estimated a 0.7% increase in July.

And an early look at retail inventories estimated a 0.4% increase.

What happened:

There were widespread reductions in exports in July, which fell for the second month in a row.

Exports of capital goods and consumer goods help pace the month’s losses.

At the same time, the gains in imports were across the board, with the only monthly drop for consumer goods.

The big picture:

For all of President Trump’s focus on the trade deficit, it remains on a steadily widening trajectory.

The trade gap is about 7% wider year-to-date compared with the corresponding period in 2017, said Oren Klachkin, economist at Oxford Economics.

A strong U.S. economy is drawing in imports.

On the other hand, the global economy has softened after a strong start in the year.


Exports are also being held down by the rising dollar.

The U.S.-Mexico agreement reached Monday has led to hopes that the various ongoing trade disputes with China and others would devolve into trade wars.

What they are saying:

The decline in exports could also be some retaliation on U.S. goods from the Trump administration’s tough global trade negotiation stance, said Robert Brusca, chief economist at FAO Economics.

Market reaction:

Stocks were set to open higher a day after the U.S. and Mexico announced their deal.

The Dow Jones Industrial Average rose in early trading.

https://www.marketwatch.com/story/us-tr ... 2018-08-28
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Re: THE ECONOMY

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MARKETWATCH

"U.S. economy accelerates to 4.1% rate in second quarter, fastest in almost 4 years"


By Greg Robb

Published: July 28, 2018 1:02 p.m. ET

The numbers:

Consumers and government spending powered the economy to a 4.1% rate of gross domestic product growth in the second quarter, the fastest pace in almost four years.

Economists surveyed by MarketWatch had forecast a 4.2% increase in GDP, the official scorecard for the U.S. economy.

Growth was revised up in the first quarter to 2.2% from 2%.

What happened:

Consumer spending accelerated to a 4% annual pace of growth after a sharp pullback in the first quarter.

Government spending also accelerated at both the federal and state levels.


Business fixed investment increased 5.4% in the second quarter, down from a 8% gain in the first three months of the year.

Residential investment declined for the second straight quarter but at a slower pace than the first quarter.

The trade gap narrowed, boosting GDP.

But this was offset by a downturn in inventory investment.

Still, perhaps a truer reading of economic power, real final sales for domestic purchasers, which excludes trade and inventories, rose a strong 3.9% in the second quarter.

Inflation moderated a bit.

The personal consumption expenditure price index rose at a 1.8% annual rate in the second quarter, down from a 2.5% rate in the first quarter.

The core rate rose at a 2% rate, down from 2.2% in the first quarter.

Big picture:

Activity boomed in the second quarter and the growth does not seem to be due to one-off factors, as some economists had feared.

Over the past year, the economy has expanded at a 2.8% annual pace, up from a 2.6% annual rate in the first quarter.

Economists say this is strong enough to keep putting downward pressure on the unemployment rate.

Fed Chairman Jerome Powell has said that strong growth is one reason the central bank should keep raising interest rates.

With inflation moderate, the Fed is expected to stay on the pace of a quarter-percentage point rate hike every three months.

Many analysts think growth should stay strong, helped by stimulative fiscal policies, such as tax cuts.

There is concern reported in various business surveys that trade disputes could slow activity, but so far there is little evidence of any disruption in the economic data.

What are economists saying?:

“This is the high watermark for the year as it will be difficult to surpass."

"There will be some deceleration, but to 3% growth from 4%,” said Ryan Sweet, director of real-time economics at Moody’s Analytics.

He said the strength of consumer spending was a surprise and was fueled in part by the Trump tax cut.

But it wasn’t all taxes.

The tight labor market is helping consumers as well, Sweet added.

Market reaction:

U.S. stocks saw little movement on Friday, as investors juggled another batch of corporate results.

The dollar held its modest gain after the data hit.

https://www.marketwatch.com/story/us-ec ... 2018-07-27
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Re: THE ECONOMY

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BLOOMBERG

"Trump to Back $200 Billion China Tariffs as Early as Next Week, Sources Say"


Jennifer Jacobs, Shawn Donnan, Andrew Mayeda, Saleha Mohsin

Published:Aug 30 2018, 6:18 PM Last Updated:Sep 01 2018, 1:42 AM

(Bloomberg) -- President Donald Trump wants to move ahead with a plan to impose tariffs on $200 billion in Chinese imports as soon as a public-comment period concludes next week, according to six people familiar with the matter.

Asked to confirm the plan in an interview with Bloomberg News in the Oval Office on Thursday, Trump smiled and said it was “not totally wrong.”

He also criticized management of the yuan, saying China has devalued its currency in response to a recent slowdown in economic growth.

Companies and members of the public have until Sept. 6 to submit comments on the proposed duties, which cover everything from selfie sticks to semiconductors.

The president plans to impose the tariffs once that deadline passes, according to the people familiar with the matter, who spoke on condition of anonymity because the discussions aren’t public.

Broadening the tariff battle would mark the most significant move yet in a months-long trade standoff and dent China’s growth prospects.

Data released on Friday will allay some concerns over the near-term outlook as China’s official factory gauge unexpectedly strengthened this month following government measures to underpin demand.


"China is more prepared, mentally, this time than it was for the previous round of tariffs," said Gai Xinzhe, an analyst at the Bank of China’s Institute of International Finance in Beijing.

"The scale is enormous and once the tariffs materialize, they will definitely send jitters through financial markets."

Such unease was already on display Friday with Asian and European stocks declining, and and U.S. equity futures pointed to a dip at the open.

The yen held on to gains, while the Bloomberg Dollar Spot Index drifted.

The tariff news exacerbated already fragile market sentiment amid currency routs in Argentina and Turkey.

Tariffs Loom

Some of the people cautioned that Trump hasn’t made his final decision, and it’s possible the administration may enact the duties in installments.

The U.S. has so far imposed levies on $50 billion in Chinese goods, with Beijing retaliating in kind.

It’s also possible the president could announce the tariffs next week, but say they will take effect at a later date.

The Trump administration waited about three weeks after announcing in mid-June that it was imposing tariffs on $34 billion of Chinese goods before they were implemented.

The next stage of tariffs on $16 billion of goods took hold in August.

China has threatened to retaliate by slapping duties on $60 billion of U.S. goods.

The Ministry of Finance and Ministry of Commerce didn’t immediately respond to Bloomberg faxes seeking comments on Trump’s intentions.

Tensions with the U.S. may be having an effect elsewhere, helping bring Japan and China closer together.

The nations’ finance ministers agreed in Beijing on Friday that protectionist policies aren’t in anyone’s interest and they would support and promote the multilateral trading system.


The previous day, Japan’s Finance Minister Taro Aso discussed U.S. trade with China’s Vice Premier Liu He, who led a previous round of negotiations with the U.S.

The Trump administration is finalizing the list of Chinese targets and tariff rate, which could range from 10 percent to 25 percent, following six days of public hearings earlier this month.

Trump’s plan to bring down his biggest hit yet on China comes as two-way trade talks show little signs of progress.

China hawks have been on the ascendancy in the Trump administration.

One of them -- U.S. Trade Representative Robert Lighthizer -- has been responsible for one of the president’s biggest trade victories so far by forging a bilateral trade deal to replace Nafta with Mexico.

The deal was announced on Monday and Canada is now negotiating to join.

The latest China tariff decision is causing heated debate within the administration, with Lighthizer and White House trade adviser Peter Navarro pushing for quick action, and Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow arguing for more time, according to people familiar with the matter.

Squeezing China

Trump cut off negotiations with China because of what he perceives as Beijing’s lack of cooperation in nuclear talks with North Korea, one of the people said.

The president wants to squeeze China, believing the U.S. has leverage over Beijing, that person said.

Trump on Wednesday accused China of pressuring North Korea not to bend in nuclear negotiations with the U.S.

But he insisted that the trade differences would be resolved.

“As for the U.S.-China trade disputes, and other differences, they will be resolved in time by President Trump and China’s great President Xi Jinping."

"Their relationship and bond remain very strong,” Trump said on Twitter.

https://www.bloombergquint.com/global-e ... gs.ziRVOzc
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Re: THE ECONOMY

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MARKETWATCH

"Jobless claims scraping lows not seen since 1969"


By Jeffry Bartash

Published: Aug 30, 2018 12:52 p.m. ET

The numbers:

The already small number of Americans applying for unemployment benefits each week touched a new bottom in late August that by one measure was the lowest level since 1969.

Initial jobless claims, a tracker of sorts for layoffs in the U.S., rose by 3,000 to 213,000 in the seven days from Aug. 19 to Aug. 25.

Economists polled by MarketWatch had forecast a 212,000 reading.

More notably, the monthly average of claims fell by 1,500 to 212,250, the government said Thursday.

That’s the lowest level since December 1969.

The number of people already collecting unemployment benefits declined by 20,000 to 1.71 million.

These are known as “continuing” claims.

What happened:

The rate of layoffs in the U.S. have been declining for years and are now near the lowest levels in half a century.

Most companies says it’s so hard to find skilled labor they are reluctant to cut any jobs, even when business is slow.

Fortunately few firms are even experiencing that.

Big picture:

The U.S. economy is on track for another strong stretch of growth in the third quarter that began July 1.

Economists forecast 3% growth after a robust 4.2% increase in the spring.

If the White House strikes a trade deal with Canada soon, it could add fresh momentum to an already bustling economy.

The Federal Reserve is likely to raise interest rates again in September and make it more expensive to borrow money, but the central bank’s action is unlikely to dampen growth.

What they are saying?:

“Current claims levels continue to reflect a labor market that is very tight,” said Thomas Simons, senior money market economist at Jefferies LLC.

Market reaction:

The Dow Jones Industrial Average and the S&P 500 fell in Thursday trades.

The stock market has surged this week and set a number of records, however, after President Trump announced a pending new free-trade deal with Mexico.

The 10-year Treasury yield was little changed at 2.87%.

Bond yields had climbed to as high 3% earlier this year before retreating.

https://www.marketwatch.com/story/joble ... 2018-08-30
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Re: THE ECONOMY

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MARKETWATCH

"Consumers keep on spending in July, pushing key inflation gauge to 6-year high"


By Jeffry Bartash

Published: Aug 30, 2018 12:48 p.m. ET

The numbers:

Consumer spending rose sharply in July for the fifth month in a row, getting the economy off to a good start at the beginning of the third quarter.

The good news has not come without a cost, though.

The strong economy has pushed a key inflation barometer to a six-year high and all but assured that U.S. interest rates will soon rise.


The government said consumer spending climbed 0.4% in July, matching the estimate of economists polled by MarketWatch.

Incomes rose 0.3%.

Higher spending and faster economic growth have also fueled creeping inflation amid a growing shortage of labor and rising costs for raw materials.

The 12-month increase in the PCE index, the Federal Reserve’s preferred inflation gauge, rose to 2.3% from 2.2%.

That’s the highest level since April 2012.


What’s more, the yearly increase in the core PCE rate that strips out food and energy hit 2% for first time since March and only second time since 2012.

What happened:

Consumer spending has increased by 0.4% or higher in every month going back to March.

In July, Americans spent more on hotels, eating out and prescription drugs.

The savings rate fell a tick to 6.7% from 6.8% as spending outpaced incomes.

The savings rate had been as high as 7.4% earlier this year.

The PCE inflation index rose 0.1% in July.

The core rate advanced 0.2%.

Big picture:

Ebullient consumers helped turbo-charge the economy in the spring, when gross domestic product surged by 4.2%.

And economists predict GDP will increase by at least 3% in the third quarter.

Consumers have by far the biggest influence on the economy and they are feeling pretty darned good.

Unemployment is low and falling, incomes are rising and the stock markets has roared back to record or near record highs.

Consumer confidence recently rose to an 18-year peak.

The downside to the economy’s upside, however, is steadily increasing inflation.

The Fed is raising interest rates to prevent the economy from overheating, but that means Americans will pay more to borrow money to buy new homes and cars and the like.

The Fed is widely expected to raise interest rates again at the end of September.

What they are saying?:

“Improving household finances, fueled by solid wage gains and lower personal tax rates, will help bolster consumer spending for the next several quarters,” said James Bohnaker, associate director of U.S. and consumer economics at IHS Markit.

Market reaction:

The Dow Jones Industrial Average and the S&P 500 fell in Thursday trades.

The stock market has surged this week and set a number of records, however, after President Trump announced a pending new free-trade deal with Mexico.

The 10-year Treasury yield was flat at 2.87%.

Bond yields had climbed to as high 3% earlier this year before retreating.

https://www.marketwatch.com/story/consu ... 2018-08-30
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Re: THE ECONOMY

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MARKETWATCH

"Opinion: Trump’s exasperating ignorance on trade"


By Caroline Baum

Published: Aug 30, 2018 3:00 p.m. ET

There is nothing more infuriating than Donald Trump’s repeated insistence that the U.S. “loses over 800 Billion Dollars a year on really dumb Trade Deals.”

(The random capitalizations are Trump’s, not mine.)

One loses money to the house at a gambling casino.

One loses money selling a home below the purchase price.

One loses money when a cash-filled wallet is stolen.

And one loses money when a company goes belly up — except, of course, in the case of Donald Trump and his Atlantic City casinos.

But on a voluntary transaction between two parties, there is no “loss” unless one party misrepresents the product he is selling or delivers less than the contractual amount, in which case it falls to the courts to remedy the buyer.

Trump might want to consult the dictionary to alleviate his confusion.

Trade is defined as the activity of buying and selling goods and services, especially between countries.

A trade is the act of “exchanging one thing for another.”

Nothing there about one side “losing.”


Trade is also a verb: to buy, sell or exchange goods.

It’s hard to find any meaning of the word that comports with Trump’s definition of other countries ripping off the U.S. through long-standing trade agreements, the effect of which has been to reduce tariffs and other trade barriers over time.

(I’ll leave it to the hipper set to decipher the Urban Dictionary definition.)

So why does Trump persist in advocating something that makes him look stupid?

For someone whose policy preferences blow with the prevailing winds, Trump has been amazingly consistent in his commitment to protectionism and his insistence that trade is a zero-sum game.

He cannot, or will not, be convinced by research and statistics that trade creates more jobs than it eliminates because access to cheaper imports enables consumers to spend more on something else.

He cannot, or will not, be convinced by research and statistics that trade does not affect the total number of jobs in an economy over the long run; just the particular types of jobs, which will reflect the areas in which that nation excels.

And don’t even try to explain the notion of comparative advantage to him: the idea first proposed by David Ricardo in 1817 that a country benefits from producing items in which it specializes, or has a comparative advantage, and buying lower-cost goods from another country.

That is true even if one country excels, or has an absolute advantage, in producing all goods.

This is why the U.S. imports T-shirts and sneakers from less-developed countries and specializes in manufacturing high-tech fabrics for NASA astronauts.

And no, those jobs aren’t coming back to the U.S., which would be tantamount to putting the car into reverse.

It’s true that as wages rise in developing nations, businesses may find it advantageous to relocate to the U.S. to be closer to their biggest customers and afford themselves the legal protections offered by this country.

But in general, the goal should be to create an environment to attract new, high-tech manufacturing industries, such as the plants that were lured to Mississippi’s Golden Triangle, one of the poorest regions of the country.

All countries are losing, or will lose, manufacturing jobs to automation over time.

That’s what happened in agriculture.

The U.S. was once a nation of farmers.

In 1800, 83% of the U.S. labor force was employed in agriculture.

Today it’s about 1.7%.

Between 1948 and 2011, U.S. farm output rose 1.5% a year, according to a 2015 U.S. Department of Agriculture study.

The “extraordinary performance of the U.S. farm sector was driven mainly by productivity growth:” specifically, by total factor productivity, or the more efficient use of inputs.

Then there’s Trump’s refusal to acknowledge that there’s more to the economy than manufactured goods.

After all, the U.S. is a services economy.

Last year, private goods-producing industries accounted for 18.4% of gross domestic product.

Services? 68.9%.

(The residual, 12.7%, is government.)

So service-producing industries are responsible for more than two-thirds of U.S. economic output, but in Trump’s world, services don’t count.

The U.S. ran a $552 billion trade deficit in 2017: a goods deficit of $807 billion, partially offset by a services surplus of $255 billion.

Trump focuses solely on the goods deficit, not to mention his mistaken categorization of it as a “loss.”

During the 2016 presidential campaign, Trump fashioned himself as the second coming of Ronald Reagan.

Towards that end, he has extrapolated the message of one of Reagan’s classic remarks, only to apply it mistakenly to international trade.

Asked about his Cold War strategy, Reagan offered a terse response: “We win, they lose.”

https://www.marketwatch.com/story/trump ... 2018-08-30
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Re: THE ECONOMY

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MARKETWATCH

"Construction spending ticks up in July, led by public sector"


By Andrea Riquier

Published: Sept 4, 2018 10:52 a.m. ET

The numbers:

Construction expenditures were 0.1% higher in July than in June, led by the public sector, the Commerce Department said Tuesday.

Outlays in July were 5.8% higher than a year ago.

What happened:

All of the strength in July came from public works, which rose 0.7% during the month.

Spending on private construction ticked down 0.1% for the month.

Residential construction increased 0.6% compared to the prior month, and was 6.6% higher than a year ago.

The July figure missed the Econoday forecast of a 0.4% monthly increase.

Big picture:

The government’s construction spending data is choppy, but the overarching trend is up.

Through the first seven months of the year, expenditures were 5.2% higher than in the same period in 2017.

Market reaction:

The Dow Jones Industrial Average was down moderately in mid-morning trading even as a key manufacturing gauge hit its highest level since 2004.

What they’re saying:

“Disappointing," said Ian Shepherdson, chief economist for Pantheon Macroeconomics.

“For now it appears that construction activity is softening after a very strong first half.”

https://www.marketwatch.com/story/const ... 2018-09-04
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Re: THE ECONOMY

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MARKETWATCH

"American manufacturers growing at fastest pace in 14 years, ISM finds"


By Jeffry Bartash

Published: Sept 4, 2018 12:00 p.m. ET

The numbers:

American manufacturers are on a roll: Business conditions surged in August to a 14-year high, according to a a survey of industry executives.

The Institute for Supply Management said its manufacturing index jumped to a 14-year high of 61.3% last month from 58.1% in July.

Economists surveyed by MarketWatch had forecast the index to total 57.9%.

Readings over 50% indicate more companies are expanding instead of shrinking.

What happened:

The ISM’s new-orders index climbed 3.2 points to 65.1% and the employment gauge rose 2 points to 58.5%.

Some 16 of the 18 industries tracked by ISM reported expanding in August.

The ISM index is compiled from a survey of executives who order raw materials and other supplies for their companies.

The gauge tends to rise or fall in tandem with the health of the economy.

Big picture:

Growth in the U.S. economy exploded in the spring and the third quarter that got underway in July is also shaping up to be a good one.

The economy is firing on almost all cylinders, though the persistent threat of a broader trade war continues to threaten recent gains.

As an illustration, one of the few industries to contract in August was “primary metals,” a grouping that includes steel and aluminum producers.

U.S. tariffs and retaliatory foreign measures have made it harder to obtain key metals at stable prices.


Prices for raw materials are also on the higher side, though inflationary pressures have eased a bit lately, executives said.

“While demand remains quite upbeat, rising inflation and trade-related uncertainties are pressuring margins and causing businesses to plan cautiously for the year ahead,” said Gregory Daco, chief U.S. economist at Oxford Economics.

What they saying?:

“Business continues to be strong."

"We anticipate growth in the next few months,” an executive at a maker of plastics and rubber products told ISM.

Another senior executive at a maker of fabricated-metal products said “the toughest thing we deal with is the unknown."

"Dealing with tariffs on steel purchases and not knowing if or when they will end makes planning difficult.”

Market reaction:

The Dow Jones Industrial Average and the S&P 500 fell in Tuesday trades.

The stock market has retreated in the past few days after a flareup in trade tensions between Canada and the Trump administration.

The 10-year Treasury yield rose slightly to 2.90%.

Bond yields had climbed to as high 3% earlier this year before retreating on persistent trade tensions.

https://www.marketwatch.com/story/ameri ... 2018-09-04
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