Income Trends Continue Upward, Services are Driving Spending, and Pandemic Suppresses Asian Manufacturing PMI’s
August 2, 2021 | FIRESIDE CHARTS
Personal income is still well above pre-pandemic trends as we move into August but without government support, most of which was saved, this would not be the case. Inflation measures also remain elevated but were a bit softer than expected. Turning to consumer spending, while services have been the driving force more recently the gap between goods and services remains wide.. Although the Dow 30 industrial hit a new high, transports and utilities don’t seem to be following suit. Meanwhile, the S&P 500® Index broke out above its growth trend—could this spell trouble or is it just a blip? Looking to the rest of the world, European GDP and inflation reported slightly higher than expected while Asian countries continue to get slammed by rising cases of Covid-19—and the economic impact is apparent in the Manufacturing PMI reports out of China and the ASEAN countries.
- While personal income is still elevated, the vast majority is due to government support programs:
Source: The Daily Shot, from 8/2/21
2. Much of the government’s support was saved. Will this savings become an engine for growth, or will the savings persist like it did after WWII?
Source: The Daily Shot, from 8/2/21
3. Will inflation measures continue upward, or have we peaked?
Source: The Daily Shot, from 8/2/21
4. While U.S. consumption has recovered to pre-Covid levels, the gap between goods and services is still significant:
Source: The Daily Shot, from 8/2/21
5. While the Dow 30 industrials hit a new high, the transports and utilities are not confirming according to the Dow Theory:
Source: The Chart Store, from 8/2/21
Source: The Chart Store, from 8/2/21
6. The S&P 500 has broken above its growth trend channel. Blip, top, trouble or double?
Source: The Chart Store, from 8/2/21
7. European GDPs and inflation both showed mild higher-than-expected prints:
Source: The Daily Shot, from 8/2/21
8. Covid is now decimating many Asian countries:
Source: JHU CSSE, from 8/2/21
Source: JHU CSSE, from 8/2/21
9. Asian economic reactions to Covid are showing in the PMI numbers:
Source: IHS Markit, from 8/2/21
10. The PMI reports from China were relatively weak which fosters a return to low growth worry for many:
Source: IHS Markit, from 8/2/21
11. China’s junk bond market looks over-extended and ready for some defaults:
Source: The Daily Shot, from 8/2/21
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