Today's Scoop:

Hey friends - almost Friday. Look out for your Weekly Scoop tomorrow.

Here’s what you need to know today…

1. Americans aren’t spending as much as we thought.

2. Most people have already burned through their extra savings.

3. Layoff rates are still low.

S&P 500: 4,299.70
1Mo: -4% | 1Yr: +18% | 5Yr: +49%

The market floated sideways again today as investors waited through the drought of new economic data. A government shutdown looks pretty likely.

Americans aren’t spending as much as economists thought, raising concerns about the economy's health. In the Commerce Department’s updated estimate of US economic growth in the second quarter, the overall growth measure stayed the same, but consumer spending growth was cut in half. Higher-than-expected business investment in new factories made up for it overall, but investors are worried because consumer spending is the most important, powering two-thirds of the economy. Overall, the US economy was still strong, with 2.1% GDP growth between April and June. [🤓]

Most people have less savings than before the pandemic. A recent Federal Reserve study revealed that only the top 20% of the wealthiest Americans have more savings today than before the pandemic. The unique pandemic combination of forced lockdowns and government stimulus boosted most people’s extra cash savings. The poorest 40% of Americans now have 8% less cash than in March 2020. The middle 40-80% of income earners now only have about what they did three years ago or a little less. This trend could lead to a further economic downturn as households run low on spare funds.

Layoff rates are still very low. The Labor Department reported initial unemployment claims rose slightly last week to 204,000 but remained lower than economists expected. Unemployment is historically low, and there are still more than 1.5 available jobs for every unemployed person.

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• Target closes stores over rising organized crime

• McDonald’s resists European demands for reusable dishware

• Lyondell Basell launches more sustainable plastic alternatives

• Peloton forms an alliance with Lululemon

• GameStop names Ryan Cohen CEO, President, Chairman, Largest Shareholder, Final Hope?

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What is GDP, and how do we track the economy?

Gross Domestic Product (GDP) is how we track how much stuff the economy is producing. The actual number (~$27 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 (+2.1%) of the quarter, 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 (+0.5%) and not representative of the growth/decline over the past year (+2.5%). Annualizing the past quarter’s change makes the backward-looking number a little more forward-looking.

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Rising Rates & Job Uncertainty: Step one in personal finance is always to make sure that you have an emergency savings in cash. Whether you think it’s enough to stash 3-6 months of income or 3-6 months’ worth of expenses, you need to have it ready.

Use Raisin (formerly SaveBetter) to ensure your savings account pays you at least 5%. Interest rates have gone up A LOT, but the big banks don’t need your deposits. They can keep paying you less than 1% and not worry. See where what a savings account pays at smaller banks here.