Week of Sept 1, 2024 Weekly Recap & The Week Ahead
When in doubt, get out and get a good night’s sleep. I’ve done that lots of times and the next day everything was clear… While you are in [the position], you can’t think. When you get out, then you can think clearly again. — Michael Marcus
1. US Economy Expands at Revised 3% Rate on Resilient Consumer — Gross domestic product rose at a 3% annualized rate during the April-June period, up from the previous estimate of 2.8%, according to Bureau of Economic Analysis figures published Thursday. The economy’s main growth engine — personal spending — advanced 2.9%, versus the prior estimate of 2.3%. The other main gauge of economic activity — gross domestic income — rose a more moderate 1.3% in the government’s first estimate for the period, matching the first-quarter gain. Whereas GDP measures spending on goods and services, GDI measures income generated and costs incurred from producing those same goods and services. The average of the two growth measures was 2.1%.
2. US Pending Home Sales Gauge Drops to Lowest on Record — A National Association of Realtors index of contract signings fell 5.5% to 70.2 last month, the lowest in data back to 2001, the group said Thursday. The drop was larger than all estimates in a Bloomberg survey of economists and reflected declining sales in all four major regions. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming US presidential election,” NAR Chief Economist Lawrence Yun in a statement.
The previously owned home market has been hamstrung by high borrowing costs and lean inventory for nearly two years. While mortgage rates have declined this month to the lowest in over a year, high prices and limited inventory are deterring prospective buyers who might still be holding out for cheaper rates.
3. Apple, Nvidia Are in Talks to Invest in OpenAI — The investment would be part of a new OpenAI fundraising round that would value the ChatGPT maker above $100 billion, people familiar with the situation said. The Wall Street Journal reported Wednesday that venture-capital firm Thrive Capital is leading the round, which will total several billion dollars, and Microsoft MSFT 0.61%increase; green up pointing triangle is also expected to participate. It couldn’t be learned how much Apple, Nvidia or Microsoft will invest into OpenAI this round. To date, Microsoft has been the primary strategic investor in OpenAI. It owns a 49% share of the AI startup’s profits after investing $13 billion since 2019. Apple in June announced OpenAI as the first official partner for Apple Intelligence, its system for infusing AI features throughout its operating system. The new AI will feature an improved Siri voice assistant, text proofreading and creating custom emojis.
4. Fed Favored Inflation Gauge’s Mild Gain Sets Stage for Rate Cut — The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 0.2% from June, according to Bureau of Economic Analysis data out Friday. On a three-month annualized basis — a metric economists say paints a more accurate picture of the trajectory of inflation — it advanced 1.7%, the slowest this year. While spending picked up, income growth was much more sluggish and the saving rate declined. That may raise questions about the durability of consumer spending going forward. Friday’s report supports the view that it’s time to begin unwinding the restrictiveness of monetary policy. Combined with emerging cracks in the labor market, the sustained cooling in inflation explains why Fed Chair Jerome Powell said last week “the time has come” for central bankers to start lowering borrowing costs, likely next month.
The week ahead — Economic data from Econoday.com:
