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A Beacon of Resilience in the Global Economy

September 18, 2023

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We are back again with our weekly summary and analysis of recent economic data, shedding light on consumer trends, inflation, and the Global Economy.

Recent economic data shows sustained strength in the U.S. economy, contradicting concerns of a slowdown or potential recession.

Digital rendering of a calendar, a pie chart, and a bar graph. Global Economy
Demand and consumer sentiment remain strong in the US. Photo by Monstera Production.

Here’s a quick digest:

  • Demand is still robust: The U.S. economy shows continuing demand and spending, unlike the rest of the Global Economy. This ongoing strength is a pivotal factor in America’s resilience against recession.
  • Inflation is hard to kick: The persistence of inflation is being especially influenced by factors like energy prices which are not coming down.
  • August Retail Sales Surpass Expectations: Americans keep on spending. Retail sales saw a rise of 0.6%, mainly fueled by a pretty significant 5.2% increase in gas station sales. Even aside from these factors, overall growth was still positive at 0.2%. This is thanks to strong consumer spending across electronics, clothing, and health stores.

Overall, consumer confidence remains remarkably strong. Analyst Richard de Chazal of William Blair said that the latest trends don’t suggest that consumers are reeling from higher interest rates and low confidence.

Instead, he argues that the data we have paints a picture of a resilient consumer, backed by factors like low unemployment, consistent income, and surging confidence.

Digital rendering of a bar and line graph with the title ‘revenue’ Global Economy
The producer price index was also strong in August. Photo by Monstera Production.

The Producer Price Index (PPI) also registered a spike last month. The PPI is a measurement that indicates potential future consumer prices. It showed a 0.7% growth in August, the most significant in over a year.

Elevated energy costs certainly played a role here, with gasoline prices skyrocketing by 20%. That having been said, the core PPI still grew by 0.3%, which shows some persistent inflationary pressure.

Key Takeaways

Whilst the U.S. economy is still showing remarkable resilience, strong consumer demand could escalate the inflation challenge. As always, stay informed, review your allocations at regular intervals, and enjoy your investing.

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