Please see below, EPIC Investment Partners’ Daily Update detailing the latest figures on the strength of the US economy. Received this morning – 31/05/2024
The Fed’s Beige Book lived up to its name, revealing little in the way of new colour on the US economy, which it noted had maintained modest growth from early April to mid-May, though conditions varied across industries and regions.
Most districts reported slight economic expansion, though consumer spending remained subdued due to high inflation and uncertainties. Some sectors like travel/tourism and housing showed resilience. Employment rose slightly overall with modest job gains, but labour shortages persisted. Wage growth was moderate. Inflation continued rising modestly, with businesses facing consumer pushback on price hikes and smaller profit margins. Input costs were mixed, with some declines in material prices. Modest price growth was expected near-term.
Despite pockets of resilience, overall economic outlooks grew more pessimistic due to rising uncertainties and downside risks stemming from inflation, tighter financial conditions, and economic headwinds.
Furthermore, data released yesterday showed the US experienced a slower growth rate in the first quarter of the year than initially estimated, primarily due to weaker consumer spending on goods. GDP rose 1.3%yoy, lower than the previous estimate of 1.6%. Personal spending, which is the main driver of economic growth, advanced by 2.0%, a downward revision from the earlier estimate of 2.5%.
We also had an insight into corporate profits and inflation figures. Adjusted pre-tax profits for corporations declined by 0.6% in the first quarter, marking the first drop in a year. The Fed’s preferred inflation metric, the personal consumption expenditures price index (PCE), rose at an annualised rate of 3.3% in the first quarter, slightly lower than the initial projection. The core PCE gauge, which excludes food and energy, increased by 3.6%, a minor revision from the previous estimate of 3.7%. Markets will closely monitor the hotly anticipated PCE deflator readings for April, due later today. The headline figure is expected to have risen 0.3%mom and 2.7%yoy, and the core reading is forecast at 2.8%yoy.
Finally, it seems some crows have taken the phrase “bird brain” and given it a whole new meaning! In a remarkable discovery that might just ruffle a few feathers in the world of animal cognition, scientists in Germany recently found crows do in fact possess counting skills and are able to associate different sounds with numbers. These brainy birds have shown that they can not only outwit many seven-year-olds (“proven” in 2014), but they can now challenge most of their younger siblings with their arithmetic mastery. So, the next time you see a kindergartener excited about their counting skills, you can clap back with a resounding “Caw! Caw! Caw! Caw!”
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Alex Kitteringham
31st May 2024