Economic Data Tracker – 
Quiet but supportive economic week

Trend watch

Alas, summer is waning as K-12 schools have already begun in the South and some colleges are beginning freshman orientations. Accordingly, weekly air traffic is beginning to make its initial decent following the summer peak, breaking an unprecedented streak of topping 19 million in six of the prior eight weeks. At 18.6 million this past week, it still surpasses the pre-COVID record of 18.4 million. 

What’s new this week

• Services surveys solid in July (slide 7).
• Jobless claims hanging around pre-pandemic averages (slide 8).
• Consumers: Vast majority current on payments (slide 9).
• Banks lending standards stable in 2Q24, which should help economy grow (slide 10).
• Loan pricing relaxed in past 4 quarters, and demand back to even (slide 11).
• Used car prices up in July, prices for EVs down sharply from ’23 (slide 12). 

Our take

It was generally a quiet week on the economic data front, especially compared to the fireworks caused by the July jobs report a week ago. Though no major data points that typically move markets, reports regarding services and the weekly jobless claims seemed to assuage some investors that were in an apparent recession panic last week.

Those reports were accompanied by several lending related reports – for payments and delinquencies, as well as bank lending – that also showed consumers remained solid and weren’t falling off the proverbial cliff.

As we discussed last week, July’s headline job growth was a clunker. There were several factors that contributed to July’s weakness; most notably, weather impacts by Hurricane Beryl, particularly in Texas. Furthermore, there was seasonality within the auto industry. Nonetheless, the moderating labor trends reflect the broader economy, which has been clearly cooling for the better part of a year. Still, the six-month average of 193,800 remains above the pre-pandemic 3-year average of 177,000.

Also, wage growth remains well above the pre-pandemic pace, and an unemployment rate under 5%, which is considered full employment. Thus, the labor market isn’t weak. We’d categorize it as further normalization.

More importantly, when we search broadly for signs of weakness, they too appear more like normalization than an outright downturn. There simply isn’t wide-ranging weakness within most of the broad data trends – from retail sales and freight figures to activity-based data, such as the robust air passenger counts.

The exceptions are housing and manufacturing. But even within those sectors, there are some bright spots. For instance, multi-family construction is showing signs of life. Similarly, within manufacturing, machinery and tool manufacturing isn’t experiencing the same downturn as aerospace. Moreover, even within aerospace, military and defense contractors appear to be solid despite the well-known issues for commercial aircraft manufacturers.

Hence, we continue to caution against painting the U.S. economy with a broadbrush. Its much more complex and nuanced than it appears. The U.S. economy is cooling but not weak, especially compared to pre-pandemic trends. That is especially so given noise within some of the economic data recently. Instead, we chalk it up to further normalization, albeit uneven. Accordingly, while we are concerned about the speed of the cooling, we aren’t panicked that a recession is imminent. 

Bottom line

We maintain our view that the U.S. economy is cooling but not weak, especially when compared to pre-pandemic figures. However, it’s steadily becoming more apparent that interest rates are overly restrictive to the point of hampering growth. The Federal Reserve is on track for a rate cut in September.