US Economic Growth Picking Up, Inflation Muted

US Economic Growth Picking Up, Inflation Muted

US Economic Growth Picking Up, Inflation Muted

$DIA, $SPY, $QQQ, $VXX

The US economy expanded at a moderate pace in July through mid-August, but signs of an acceleration in inflation are muted, the latest survey conducted by the Fed showed Wednesday.

“Prices rose modestly overall across the country,” the central bank said in its Beige Book report of the economy, compiled from anecdotal evidence derived from business contacts nationwide.

Fed policymakers have raised interest rates twice this year but the prospect of a 3rd in Y 2017 appears increasingly uncertain against a backdrop of weak price pressures despite the US economy humming along with low unemployment and continued growth.

The Fed’s preferred measure of inflation retreated to 1.4% in July on a Y-Y basis, the slowest pace in more than 1.5 years.

Many of the Fed’s 12 districts reported that businesses were having difficulty filling job openings at all skill levels, but this was not resulting in a widespread boost to salaries.

“The majority of districts reported limited wage pressures and modest to moderate wage growth,” the report said, repeating sentiments expressed in previous Beige Book reports over the past several months.

The Fed said that consumer spending increased in most districts and that many contacts were becoming worried about a prolonged slowdown in the auto industry.

The slide in inflation prompted influential Fed Governor Lael Brainard Tuesday to call for the central bank to delay raising interest rates until it is confident the weak readings will rebound.

The Fed is seen holding its benchmark rate steady at its next meeting in 2 weeks time, but economists expect policymakers will take another step in removing accommodation by announcing an imminent reduction of the Fed’s $4.2-T bond portfolio.

Wednesday, the US major stock market indexes finished at: DJIA +54.33 at 21808.94, NAS Comp +17.74 at 6393.29, S&P 500 +7.69 at 2466.99

Volume: Trade on the NYSE came in at: 813-M/shares exchanged.

  • NAS Comp +18.8% YTD
  • S&P 500 +10.1% YTD
  • DJIA +10.4% YTD
  • Russell 2000 +3.3% YTD
HeffX-LTN Analysis for DIA Overall Short Intermediate Long
Bullish (0.33) Bullish (0.40) Bullish (0.31) Bullish (0.29)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.26) Neutral (0.19) Bullish (0.29) Bullish (0.29)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.30) Bullish (0.38) Neutral (0.19) Bullish (0.35)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.35) Neutral (-0.16) Bearish (-0.40) Very Bearish (-0.50)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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