Thursday's Scoop: Cruising ☀️

Hey friends - how do you feel about fall? My wife is sad summer’s over, but I’m a big fan of fall in NYC.

Insiders, look out for the Weekly Scoop tomorrow.

Here’s what you need to know today to inform your work, spending, and investments:

1. Layoffs are still low.

2. The US economy has been making more money than expected.

3. Businesses have put their investments on pause.

Unemployment Rate: 4.2%
^{Relatively low, but up from record lows.}

Despite recent headlines about layoffs, jobless claims remain relatively low. The Labor Department reported that initial unemployment claims fell by 4,000 to 218,000 last week, the lowest level in four months. This comes even as hiring has slowed, and some major companies, like General Motors and Paramount Global, have announced workforce reductions. Economists note that while claims remain low, recent unemployment rate increases are driven by a larger labor force, including workers not eligible for unemployment benefits. The number of people without a job might be higher than estimated.

The US economy has made even more money over the past few years than previously estimated. The Bureau of Economic Analysis released a revised economic analysis with massive Gross Domestic Income (GDI) increases from 2021 through June 2024. Where gross domestic product (GDP) tracks how much stuff the economy produces and sells, GDI tracks all the income from wages, profits, dividends, rents, etc. They’re two opposite measures of the total economy. GDI had been much lower than GDP over the past couple of years, but the revised growth numbers are much closer now. Corporations took in much more profit than initially estimated, and personal disposable incomes were stronger, too. Americans earned more from alternative income, like investment dividends than initially thought. That boosted the national savings rate—what’s left of disposable income after taxes and spending— to above 5%. That’s much closer to the pre-crisis level of 7% than the 3% rate reported for the past couple of years. This higher income estimation might be the secret to how people have kept spending despite the high prices for so much longer than expected.

Business investment in equipment saw only a slight increase in August, as companies remained cautious ahead of the upcoming presidential election. The Commerce Department reported core capital goods orders, a proxy for business investment, rose by 0.2%, recovering from a similar drop in July. While durable goods orders overall remained flat due to fewer aircraft purchases, businesses still showed some commitment to investment, with orders excluding transportation equipment up by 0.5%. Uncertainty surrounding future demand and election outcomes has slowed expansion plans, though falling borrowing costs may encourage investment in the months ahead.

The Market: ⬆️ +0.40%
S&P 500: 5,745.37
1Mo: +2% | 1Yr: +34% | 5Yr: +94%

The market didn't do much on Thursday as investors waited for more substantial news coming next week with the end of the quarter. Data this week reinforced the narrative of a US economy that's still doing pretty well.