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- Thursday's Scoop: Stirred🌤️
Hey friends - almost Friday.
Insiders, look out for the Weekly Scoop tomorrow.
Here’s what you need to know today to inform your work, spending, and investments…
🌎 Big picture
Layoffs cooled off last week.
The US economy accelerated in the second quarter.
Americans are still spending more and saving less as the cost of living keeps rising.
How are you feeling about the economy? |
💼Work trends
Unemployment Rate: 4.1%
Still near historic lows
Layoffs fell significantly last week, even after creeping up earlier in the month. The Labor Department reported that initial jobless claims dropped by 10,000 last week to 235,000 for the week ended July 20. The decrease comes as disruptions from Hurricane Beryl and temporary automobile plant closures fade. Unemployment remains historically low, and the number of people receiving unemployment benefits for consecutive weeks declined, indicating some stability in the job market.
The US economy had a better quarter than anyone expected. The Commerce Department reported that real gross domestic product (GDP) grew at a 2.8% annualized rate, far faster than economists expected, and doubled the growth of the first three months of the year. Consumer spending powers two-thirds of GDP, and spending accelerated over the past few months. Americans spent more on both services and goods, while imports increased by the most since early 2022. Government spending also increased last quarter, boosting the economy even more. Despite growing economic pessimism, this report indicates that the overall economy is doing well.
🤓 Inside Scoop: What is GDP, and why does it matter?
Gross Domestic Product (GDP) is how we track how much stuff the economy is producing. The actual number (~$28 trillion) doesn't matter as much as the direction and magnitude. We track the growth rate of real GDP (inflation-adjusted) to know whether the economy is expanding or contracting from the previous quarter.
The reporting style can be a bit confusing. The main number you hear will be an annualized growth rate (+2.8%), representing how much the GDP would increase/decrease if the economy hypothetically grew at that rate for an entire year. It's different from how much our production increased/decreased quarter-to-quarter (+0.7%) and not representative of the growth/decline over the past year (+3.1%). Annualizing the past quarter’s change makes the backward-looking number a little more forward-looking.
👜Cost of living trends
Inflation Rate: +3.0% (YoY), -0.1% (MoM)
Policymakers aim for 2% YoY inflation. (June CPI)
Americans continue to spend despite rising living costs. The Bureau of Economic Analysis reported that personal consumption expenditures (PCE) increased by 2.3% in the second quarter, up from 1.5% in Q1. This growth in both services and goods spending boosted overall economic growth. Policymakers’ preferred inflation gauge, the PCE price index, rose at a 2.6% annualized rate, down from 3.4% in the first quarter, indicating a slowdown in inflation. The cost of living isn’t rising as quickly anymore, but it’s still rising, making it difficult for people to add to their savings. The personal savings rate continues to decline, now at 3.5%, compared to 3.8% in Q1 and over 7% before the pandemic. Wages will need to catch up to the cost of living to provide more financial stability for low-income Americans.
📈Investment trends
The Market: ⬇️ -0.5%
S&P 500: 5,399.22
1Mo: -1%| 1Yr: +18%| 5Yr: +78%
The market wavered lower on Thursday as investors continued grappling with the transition from optimism that a slower economy means policymakers will soon reduce borrowing costs to the reality that a slower economy means less spending and business activity. A flurry of corporate financial updates has revealed decent profits thanks to cost-cutting, but sales numbers are gloomy.
🏭 Companies worth watching
👍👎 APPROVAL RATINGS
Join the board at America’s biggest companies. Vote and judge their decisions. (+2 pts)
 Lyft | Lifting Safety Lyft will try to reform its safety measures, including the promotion of a silent 911 alert feature and better misconduct reporting to settle a lawsuit over its failure to prevent sexual and physical assaults by drivers. Shareholders accused the rideshare company of hiding its safety risks before it went public on the stock market.
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💭Broader perspectives… (+2 pts)
Do you feel like rideshares are safer than they used to be? |
 Southwest Airlines | Turbulent Times Southwest Airlines' profits fell by half last quarter as operational costs climbed, and it was forced to sell discounted tickets after scheduling too many flights. To boost revenue, the airline will make the biggest change to its business model ever, moving away from open to assigned seating and offering extra legroom.
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 Pfizer | Hopeful Advancement Pfizer announced a successful late-stage trial for its gene therapy for hemophilia A, a disease that limits blood clotting and leads to severe bleeding episodes. The drugmaker's therapy results surpassed the efficacy of current standard treatments and moved Pfizer closer to US regulatory approval.
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 GE Healthcare | Unlocking Health Data GE HealthCare will partner with Amazon Web Services to develop generative AI models for medical applications that will activate massive amounts of underutilized medical data. The healthcare giant will provide employees and customers with tools to improve operations such as screenings, diagnoses, and scheduling.
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 Novo Nordisk | More Than Weightloss Novo Nordisk's blockbuster weight loss drug, Wegovy, has been approved to also treat serious heart problems in overweight adults in the US and now the UK. The pharmaceutical giant has already had trouble producing enough of the drug to meet existing demand.
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🛠️ Recommended resources (+2pts)
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