Main Topic: U.S. consumer confidence increases to a two-year high in July, but mixed signals persist.
Key Points:
1. Consumers remain fearful of a recession due to interest rate hikes.
2. Consumers plan to buy motor vehicles and houses, but fewer anticipate purchasing major household appliances.
3. Consumers intend to spend less on discretionary services but expect to increase spending on healthcare and streaming services.
Goldman Sachs analysts predict that the U.S. government is "more likely than not" to shut down later this year due to spending disagreements, which could temporarily impact economic growth by reducing it by 0.15-0.2 percentage points per week, with past shutdowns having minimal impact on equity markets.
The US economy is growing rapidly with favorable conditions for workers, but despite this, many Americans feel pessimistic about the economy due to inflation and high prices, which are driven by complex global forces and not solely under the control of President Biden or Trump. Housing affordability is also a major concern. However, the Biden administration can still tout the economic recovery, with low unemployment and strong economic growth forecasts.
Americans' attitudes toward the US economy are becoming more tentative as consumer sentiment remains steady, reflecting divergent views on the economy's improvements and concerns about inflation, with inflation expectations remaining higher than pre-pandemic levels.
Americans are growing increasingly anxious about the possibility of another government shutdown, with concerns about the impact on the economy and essential programs such as child care and fishing quotas.
The U.S. economy is defying expectations with continued growth, falling inflation, and a strong stock market; however, there is uncertainty about the near-term outlook and it depends on the economy's future course and the actions of the Federal Reserve.
Americans are experiencing a "vibecession" as consumer sentiment remains low despite a healthy market, but the link between sentiment and economic indicators has been severed since the COVID-19 pandemic, making predictions inaccurate.
Canadian consumer and business confidence has plummeted to its lowest levels since the pandemic, leading to a disconnect between the state of the economy and the public's negative sentiment, which could be attributed to anxiety-inducing inflation and concerns about rising interest rates as well as worsening structural problems such as unaffordable home prices and stagnant GDP per capita.
Uncertainty in various sectors, including potential strikes, government shutdowns, geopolitical tensions, and the question of future Federal Reserve interest rate hikes, is causing markets to lack conviction, but this week's inflation readings could provide direction for the markets. If inflation comes in below expectations, it may signal that the Fed will not hike rates further, while stronger-than-expected inflation could lead to more rate hikes and market volatility. Additionally, increasing energy prices and the potential strike by the United Auto Workers union add to the uncertainty.
The disconnect between Washington's political showdowns and overwhelming economic anxiety across the country, as revealed in a recent poll, is increasing the likelihood of a government shutdown and eroding confidence in the nation's leaders.
A new poll reveals that a majority of Americans have negative views of the economy, citing concerns about rising costs, increased debt, the end of pandemic aid, reduced spending on luxuries, and plans to spend less during the holiday season.
The potential government shutdown threatens to deprive the Federal Reserve of crucial data on the labor market and inflation, which could hinder its ability to make informed decisions about the economy and interest rates.
Despite rising gas prices, Americans remain optimistic about inflation easing, as expectations for inflation rates in the year ahead have fallen to the lowest level since March 2021, according to a consumer sentiment survey from the University of Michigan. However, concerns are surfacing about a potential government shutdown, which could dampen consumer views on the economy.
Investors are becoming increasingly cautious about the US stock market and the economy as 2023 draws to a close, leading to a more defensive investment approach by Wall Street banks and experts warning of potential pain ahead.
The White House warns that a government shutdown at the end of the month could have damaging consequences for the economy, national security, and the American public.
Wall Street feels defensive as the US national debt surpasses $33 trillion and a government shutdown looms, potentially worsening the economy's current issues and increasing the likelihood of a recession, with the shutdown estimated to cost the US economy $6 billion per week and shave GDP growth by 0.1 percentage points in the fourth quarter of 2023.
Despite threats such as a government shutdown, the UAW strike, rising gas prices, and the resumption of student loan repayments, economists are mostly unconcerned about a potential economic slowdown, believing the economy to be internally robust but vulnerable to mistakes.
The U.S. economy is facing uncertainty and conflicting estimates, with regional Fed estimates showing significant divergence and risks of economic contraction or slow growth, while factors such as health insurance costs, wage growth, home prices, and rising gas and commodity prices could potentially cause inflation to rebound. Moreover, there are still risks and challenges ahead, making declarations of victory premature, according to Larry Summers.
Investors should not be overly worried about the potential government shutdown's impact on the market, as historical trends indicate that any weakness will likely be a buying opportunity from a short-term trading perspective.
The impending federal shutdown, combined with other economic challenges such as rising gas prices, student loan payments, and reduced pandemic savings, is expected to strain American households and potentially weaken economic growth in the last quarter of the year.
Concerns over a possible U.S. government shutdown, rising oil prices, and a heavy schedule of Treasury debt sales are adding pressure to the markets, along with the ongoing property crisis in China and the effects of last week's hawkish Federal Reserve projections.
The US economy is currently in decent shape, with a resilient labor market, moderated inflation, and expected strong GDP growth, but there are potential headwinds and uncertainties ahead, including UAW strikes, student debt payments resuming, and the risk of a government shutdown, which could collectively have a significant impact on the economy. Additionally, the labor market is slowing down, inflation remains a concern, and the actions of the Federal Reserve and other factors could influence the economic outlook. While there are reasons for optimism, there are also risks to consider.
A potential government shutdown in the U.S. could negatively impact the country's credit rating, highlighting weaknesses in institutional and governance strength, according to Moody's Investors Service. The economic impacts would be concentrated in areas with significant government presence, and the severity of the effects would depend on its duration. If prolonged, it could have a more pronounced effect on business and consumer confidence as well as financial markets.
Americans are feeling pessimistic about the economy despite the decline in inflation, with rising prices and reduced household income affecting their perception, potentially influencing the outcome of the 2024 presidential election.
The market is facing uncertainties due to a long list of negatives that have yet to be fully discounted, including concerns about the economy, higher interest rates, a possible government shutdown, an auto strike, high oil prices, and the restart of student loan payments.
Consumer confidence in the US dropped in September, signaling a growing concern among Americans that the economy might be heading towards a recession, as inflation, rising interest rates, and recession fears continue to impact consumers.
The risks of a near-term recession are increasing due to potential government shutdown and strikes in the auto industry, which are weighing on consumer confidence, according to J.P. Morgan Asset Management Global Market Strategist Jack Manley.
The gloom in the markets continues as German and Spanish inflation data, European consumer confidence data, and the potential government shutdown in the US fail to lift investor sentiment.
The US is facing the possibility of a government shutdown as Republicans demand deep spending cuts, risking furloughs of federal workers and halting various services.
Investors are increasingly fearful due to a mix of factors including rising oil prices, expectations of higher interest rates, a sluggish Chinese economy, and the possibility of a US government shutdown, leading to concerns of a prolonged period of stagflation and a potential recession.
Millions of Americans anticipate a government shutdown as Congress struggles to pass a budget, potentially causing a short-term stock market gain.
A government shutdown would have widespread effects on everyday Americans, including reduced economic growth, closure of national parks and museums, disruptions in air travel and student loans, delays in tax and loan processing, a "data blackout" for economic statistics, and complications in law enforcement, military services, consumer product inspections, and social safety net programs, among others.
Americans' views of the economy have worsened in September, with only 20 percent saying economic conditions are good and 73 percent believing that economic conditions in the country as a whole are worsening, according to a recent Gallup poll.
Americans are becoming more concerned about a possible government shutdown and ongoing labor strikes, causing uncertainty and potential economic impacts, according to the University of Michigan's consumer sentiment survey.
Investor sentiment is being weighed down by factors such as rising interest rates, low bond yields, a potential government shutdown, and consumers facing rising prices without salary increases, but there is optimism that October could bring a turning point for the market.
A potential government shutdown in the US may lead to a delay or absence of the September consumer-price index report, which would complicate decisions for financial markets and the Federal Reserve.
Investors are showing signs of stress as big down days become more frequent and rebounds are scarce, with options traders warning against getting too comfortable amidst the risks of a narrowly-averted US government shutdown, rising Treasury yields, concerns about Federal Reserve action on inflation, and an auto-worker strike.
The summer's positive economic indicators, such as lower inflation and strong job numbers, have led to optimism that the US will avoid a recession, but factors such as a potential auto strike, the resumption of student-loan repayments, and a government shutdown could contribute to a downturn. The combined impact of these factors, along with others like higher interest rates and oil prices, suggests that a recession may be looming.
Investors will be closely watching market reactions to a late deal to avert a government shutdown, as well as key data on the labor market this week, while concerns about higher interest rates and the impact on the economy weigh on stock futures.
The potential threat of another government shutdown in the US has Wall Street concerned about the country's AAA credit ratings, with Moody's warning that a shutdown would be a credit negative for the US.
Consumer sentiment in the US fell to its lowest level since May, with Americans' expectations for inflation over the next year reaching the highest level since April, potentially leading to higher price pressure.
