Weekly Economic & Financial Commentary: First impressions are not always right

First impressions are not always right

• On the face of things, it was a disappointing week for economic data. Almost every report this week was on the wrong side of expectations. Relative to consensus estimates, gains fell short, losses were larger and unemployment figures were worse.
• The details were generally more favorable. The retail sectors hurt most by the pandemic saw gains in August, factory output is growing and soaring homebuilder confidence suggests soft construction data this week may be transitory.
• For details on the Fed meeting this week, see Interest Rate Watch on page 6.

Global economy recovering from deep decline

• The final verdict on the first half of 2020 came this week in the form of Q2 GDP for the G20 countries, which fell a record 6.9% quarter-over-quarter. Over the first of this year, G20 GDP fell 10.1%, more than three times the decline seen during the global financial crisis.
• China was the only key economy to grow in Q2 and those gains have extended into the third quarter. August industrial output firmed further, while retail sales showed their first annual increase since late last year. August employment also rose in Australia, while next week’s September PMI surveys from the Eurozone and United Kingdom should garner attention.

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