Publications

U.S. Economic Indicators

Privately-owned housing starts jumped 12.3% in August to a seasonally adjusted annual rate of 1.36 million (up 6.6% year-over-year). Housing permits rose 7.7% to a 1.42 million annual pace in August and are up 12.0% from last year. Census Bureau Report

U.S. News

The Financial Times reports that the federal funds rate jumped above the central bank’s 2-2.25% target this morning after the Fed made $75 billion in short-term funding available in a second attempt to steady the market for overnight lending. A combination of factors had dramatically reduced the amount of cash available relative to demand, sending the repo rate surging to a record high.  FT

Greg Ip of the Wall Street Journal reports that the American and global economies are experiencing a series of supply shocks, ranging from the attack on Saudi oil production to auto strikes in the U.S., that together threaten to undermine growth and push up inflation. While such supply-side incidents may not carry as much weight as in the past, they could still exert notable inflationary pressure in an economy potentially at full employment. WSJ

U.S. Economic Indicators

Industrial production rose 0.6% in August (up 0.4% year-over-year) after declining 0.1% in July. Capacity utilization rose 0.4 point to 77.9 in August. Fed Report

The NAHB Housing Market Index rose 1.0 point to 68.0 in August. The sub-index for current sales conditions rose while the sub-index of sales expectations edged down slightly. NAHB Report

U.S. News

The Wall Street Journal reports that the U.S. and Japan are moving ahead with a limited trade agreement that would lower Japanese tariffs on U.S. agricultural goods and protect Japan from U.S. tariffs on auto imports. The two countries are expected to formally sign the agreement later this month while leaving open the possibility of reaching a broader, comprehensive trade agreement in the future. WSJ

U.S. Economic Indicators

The September Empire State Manufacturing Survey indicates that business activity ebbed slightly in September as the headline index edged down 2.8 points to 2.0. The new orders index fell 3.2 points to 3.5, while the shipments index fell 3.5 points to 5.8; meanwhile, the index for number of employees rose 11.3 points to 9.7 and the hours worked index turned positive, indicating a slightly longer workweek. NY Fed Report

U.S. News

According to the Wall Street Journal, the latest drone strikes on Saudi Arabian oil production facilities and resulting rise in global oil prices are likely to have noticeable effects on China and Japan but little impact on U.S. economic activity. Since energy consumption accounts for much less of U.S. households’ total consumption while domestic U.S. oil production continues to climb, higher oil prices are likely to have a muted effect on the U.S. economy compared to the past. WSJ

Jeanna Smialek reports for the New York Times that the Federal Reserve is likely to cut interest rates for a second time Wednesday as policymakers attempt to get ahead of risks from the global economic slowdown and uncertainty stemming from the U.S.-China trade war. While investors largely expect a rate cut, the decision could still be contentious, as economic data continue to send mixed signals about the underlying health of the economy. NYT

U.S. Economic Indicators

Retail sales rose 0.4% in August and are up 4.1% from a year ago. Core sales — which exclude autos, gasoline, building materials, and food services —  increased 0.3%. Census Bureau Report

Business inventories increased 0.4% in July and were up 4.8% from July of last year. Manufacturers’ sales declined 0.2% in July but were up 0.5% compared to a year ago. Census Bureau Report

The University of Michigan Consumer Sentiment Index rose 2.2 points to 92.0 in the preliminary September reading but is down 8.1 points from September of last year. The Index of Consumer Expectations rose 2.5 points to 82.4, while the Current Economic Conditions Index rose 1.6 points to 106.9. University of Michigan

U.S. News

Kate Davidson reports for the Wall Street Journal that the U.S. federal budget gap widened to more than $1 trillion in the first 11 months of the current fiscal year, the first time the year-to-date deficit has topped that amount since 2012. A strong U.S. economy typically leads to narrower deficits, but higher government spending and lower revenue collection following the 2017 tax cuts have pushed the deficit up 19% since October of last year. WSJ

The Financial Times reports that China has announced it will exempt certain U.S. pork and soybean purchases from additional tariffs in the latest of a series of goodwill gestures intended to reduce trade tensions. The total amount of agricultural products Chinese companies intend to purchase under the new arrangement is still unclear, but the announcement represents an opportunity for U.S. pork farmers who have been left out of the recent surge in pork imports into China. FT

U.S. Economic Indicators

Consumer prices rose 0.1% in August (up 1.7% from a year ago). The “core” CPI, which excludes food and energy, increased 0.3% in August and is up 2.4% from last year. BLS Report

Initial jobless claims fell 15,000 to 204,000 last week. The four-week moving average declined 4,250 to 212,500. DOL Report

U.S. News

The Wall Street Journal reports that China is aiming to narrow the scope of upcoming negotiations with the U.S. to only trade issues, hoping to separate trade talks from discussions about national security issues in an attempt to break the deadlock between the two countries. Even a more limited deal addressing strictly trade issues may still be difficult to achieve, however, as U.S. and Chinese officials are likely to disagree on which issues are categorized as trade or national security matters. WSJ

According to the Wall Street Journal, the Social Security expansion plan under consideration by House Democrats to extend the program’s solvency would raise the cap on payroll taxes from 6.2% to 7.4% over 25 years. Opposition in the Republican-led Senate make it unlikely that the proposed expansion will become law, but the debate underscores the need to address the solvency of Social Security given that the program’s trust funds are expected to be exhausted by 2035. WSJ