Outside of the pandemic defined as 2020 and 2021, this past quarter was the 5th best quarter for nominal GDP in the last 25 years.

It was the best real growth quarter since Q2 and Q3 of 2014.

The last 12 months has been  mostly about services, here are the biggest contributors to YoY GDP:
Consumption of Services
Consumption of Goods
Lower imports
Government
Non-residential investment in structures
Intellectual property

Q2 to Q3, we saw an acceleration in goods consumption and state and local government spending. We also saw a surge in exports across the board (petroleum and products, autos and parts, travel and even consumer goods). And the 3rd differentiator making Q3 a standout quarter was the re-acceleration in residential investment we’ve been seeing.

Tis was a poor number. The headline dropped from -5.9 to -10.5. The more eye popping number was the Index for New Orders which dropped from 1.3 to -25.6. I hate to say it, the diffusion index for new orders has never gone below 21 without an accompanying recession; that is until 2023. This is the 4th reading in the last 13 months below 21.
These regional manufacturing surveys have been relatively poor since the middle of 2022. To date, it hasn’t mattered.

Its as if growth in goods consumption was so great from Q2 2020 to Q2 2022 that the current level of 3% growth in goods consumption is somehow bad? We’ll have to see how this plays out.

Disclaimer: This information is presented for informational purposes only and does not constitute an offer to sell, or the

Banks continue to tighten lending standards across all sectors. This has eased a bit from the July survey. Banks continue to widen spreads across all sectors. The percentage of banks widening spreads has also eased a tad. Banks are not seeing increasing demand for loans. I’m just posting survey results for C&I loans, the graph is very similar for commercial real estate, residential real estate and consumer loans.

Commercial and Industrial loan growth has turned negative. Loan growth in other sectors (consumer and real estate) is not at unhealthy levels, but does continue to slow.

Disclaimer: This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products.

Wall street cheered the fact that we added fewer jobs (150,000) than expected (179,000) in October. This was a welcome relief after the hot September number that was revised down from 336,000 to 279,000.
The Goods economy actually lost 11,000 jobs. The culprit here was motor vehicles and parts which was -33,000 on the month.
The Services economy gained 110,000 jobs. 77,000 were in Health Care and Social Services. 10,000 were added to perming arts and spectator sports. And another 10,000 were added in amusement, gambling and recreation.
The public sector added 51,000 jobs. 38,000 for local governments, 10,000 at the state level and the balance to the Fed.
The major Wall St narrative at play is that a combination of a lower revision and a below expectations print in

We had a bad 1st quarter relative to historic averages for job cuts. But the situation has gotten better throughout the year. In the 3rd quarter of 2023 less people are losing their job relative to the average 3rd quarter going back to 1989.

.
Disclaimer: This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences

This was a slight downward revision. Nothing to cheer and really nothing to write home about.
September Durable Goods were revised down .1% MoM in Sept and .05% MoM in Aug.
Here’s a picture of Factory Orders. Looking at this time series, it’s almost as if the recession that has been 2 years in the waiting was merely coming off a covid fever sugar high. Orders briefly went negative, but now climbing. Let’s see if we can maintain the positive momentum from Q3, stay tuned.

Disclaimer: This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook.

The most anticipated release of the week came in … “Unchanged” or sticky stuck from the August at 3.7% yoy. But it’s worth mentioning as we will discuss below that this is up from June CPI which was 3.09% yoy. Core CPI which excludes food and energy because of their volatility sits at 4.13% yoy down from 4.39% last month.

Let’s look under the hood a bit because headlines will mention “sticky” CPI and there are some reasons that CPI will indeed be stickier for longer than we hope.

Let’s first start with energy which is about 7.5% of the basket. With the exception of the spike in oil coinciding with the Russian invasion of Ukraine, oil peaked in June 22 at around $122/bbl. So for the whole year of June22-June23 oil was helping bring inflation down. In

Pandemic Wealth Effect
The top 1% of the US made about $14T or $4.2M per person.
The next 19% made about $20T or $318,000 per person.
The next 30% made about $5T or $50,000 per person.
The bottom 50% made about $1T or $6,000 per person.
The resulting inflation is at a 40yr high and Powell wants the money back.
Let’s recap what happened in the last 2 to 3 years.
In addition to the Fed providing liquidity during the pandemic, there was a coordinated effort between the Monetary Authority and the Government where the Monetary Authority funded approximately $6T in fiscal stimulus between March 2020 and April 2021. The CARES Act ($2.3T), the CAA-21 ($900B) and the American Rescue Plan ($1.9T) were the 3 main pieces of legislation or appropriation in addition to

The lagged effect of inflation.
“Just call me Ishmael,” Jay.

.
[embedded content]

Tags: economy,Featured,Federal Reserve/Monetary Policy,newsletter