Goldilocks Economy, Profitless Companies, Retirement Savings

U.S. Gross Domestic Product (GDP) grew at an annualized rate of 4.9% in the third quarter. The core personal consumption expenditures (PCE) index, the Federal Reserve’s preferred gauge of inflation, also increased by less than expected. Continued economic growth without inflationary pressures is the goldilocks scenario for the economy, although it’s unlikely that we’ve felt the full impact of higher rates. In fact, there is evidence that consumers and businesses are beginning to struggle with higher interest rates. The average U.S. stock is now negative on the year. Investors are running away from profitless companies. China’s debt burden. Retirement savings.

1. Consumer and government spending have been the largest drivers of GDP growth this year and in the third quarter residential investment was a positive contributor for the first time since 2021:

Source: The Daily Shot 10/27/2023

2. U.S. manufacturers reported growing orders:

Source: The Daily Shot 10/25/2023

3. Housing inflation pushed the Consumer Price Index (CPI) above expectations in September, but the strong reading goes against the trend of lower observed rents:

Source: Pantheon Macroeconomics  

4. The Bloomberg Industrial Metals Subindex is at its lowest level since 2021:

Source: The Daily Shot 10/23/2023

5. High interest rates along with higher car prices are stressing subprime borrowers:

Source: @wealth   Read full article  

6. Small businesses, which often rely on external financing, are at a major disadvantage in the current environment:

Source: @scottdavisCRE  

Source: Goldman Sachs; @MikeZaccardi  

7. Such a large divergence between the S&P 500 Index and the average stock has made it a difficult year for active managers:

Source: The Daily Shot 10/24/2023

8. Investors are finally asking growth companies to show profits:

Source: The Daily Shot 10/23/2023

9. The Chinese government often implements its priorities through local governments, complicating the picture of total government liabilities:

Source: @WSJ   Read full article  

10. Most people are still managing their own retirement savings the majority of the time:

Source: Goldman Sachs