Weekly economic and financial commentary

Summary

United States: August Data Holding Up Despite Delta

• Data released this week generally showed a stronger economy in August than many expected in the wake of surging COVID cases. Retail sales jumped 0.7%, defying expectations for a decline, and consumer price inflation came in better than expected, with the factors that boosted price growth this summer weighing on the index in August.
• Next week: Housing Starts (Tue.), Existing Home Sales (Wed.), New Home Sales (Fri.)

International: China Still Surprising to the Downside, Mix of Data Down Under

• A renewed outbreak of COVID and subsequent restrictions have weighed on economic prospects and have placed uncertainty over China's economic outlook, while a severe flood has also put downward pressure on economic activity lately. In Australia and New Zealand, high frequency activity indicators have slowed noticeably over the past two months.
• Next week: Brazilian Selic Rate Decision (Wed.), Eurozone PMI (Thu.), South African Reserve Bank Interest Rate Decision (Thu.)

Interest Rate Watch: Hunting for Hints at the September FOMC Meeting

• As a taper announcement draws nearer, the FOMC will likely begin to make some adjustments to its post-meeting statement. Given the disappointing August job numbers, however, such tweaks are more likely to show up in the November statement to foreshadow to an announcement in December.

Credit Market Insights: Consumer Indicators Mixed, but Finances Remain Solid

• Over the past six weeks, consumer data have been mixed to say the least, and times have been rocky financially as most fiscal support has been phased out and extended unemployment benefits have ended. But consumer fundamentals remain strong, and the threat to spending is not shaky household finances but consumers choosing to refrain from spending.

Topic of the Week: Fiscal Aid Pushes Incomes Up and Poverty Down

• New data released by the Census Bureau provide additional evidence that the massive amounts of fiscal aid deployed over the course of the pandemic helped bolster household incomes throughout the public health crisis and economic downturn.

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