What the past week revealed was already known. Growth is strong but weakening; inflation is elevated but moderating; the cost of money is high, but slowing; and corporate profits are
tenacious. In the quarter ended June 2023,the BEA reported that nominal GDP had risen at an annualized rate of 4.6%, with growth at 2.4% and inflation at 2.2%. Meanwhile, the widely
acclaimed personal consumption expenditures index (PCE) index rose 0.2% in June, registering a year-over-year increase of 3.0% and an annualized rate of 2.1% for the last 4 months. Broadly
speaking, the economy seems to have returned to what was once considered normal before the pandemic: 2% for growth and 2% for inflation. Concurrently, reported earnings by more than
150 S&P 500 companies proved to be better than expected, while giant tech companies showed that they were still doing well, matching the hype and still going concerns. The Atlanta Fed’s initial estimate for GDP growth in Q3 is 3.5%. WOW!
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By Hubert Marleau