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Hey friend - almost Friday. Look out for our Weekly Scoop tomorrow.
Here’s what you need to know today…
Big Picture
The US economy was booming this summer.
Layoffs are still low.
High mortgage rates have stalled the housing market.
The Market: ⬇️ -1.2%
S&P 500: 4,137.23
1Mo: -3% | 1Yr: +9% | 5Yr: +52%
The market continued the downward pessimism today as investors struggled to manage their mixed emotions about an economy that continues to perform better than expectations.
The US economy was booming this summer. The Commerce Department reported US gross domestic product grew 4.9% in the third quarter, [🤓] the fastest economic growth since 2021. Consumer spending, which powers two-thirds of the economy, was the most significant driver. Despite higher living costs and rising borrowing costs, Americans kept spending. It’s starting to look like that spending momentum has slowed, though, posing risks for the end of the year.
Layoffs still haven’t picked up much. The Labor Department reported initial unemployment claims rose slightly last week to 210,000 but are still hovering near normal levels. Unemployment is still at historic lows, and there are still close to 1.5 jobs available for every unemployed person.
Fear of higher mortgage costs has homeowners afraid to sell. The National Association of Realtors reported that pending sales for existing homes rose slightly in September but remained near 20-year lows. Rising mortgage rates, now around 8% for a 30-year fixed rate, have made it difficult for buyers to finance homes. Many current homeowners who locked in cheaper mortgages over the past few years aren’t eager to sell and face higher mortgage costs.
How are you feeling about the economy? |
Company Scoops 🗣️🌎💰
💡Join the board at America’s biggest companies. Vote and judge their decisions.
 Shell | Fewer Green Distractions Shell started scaling back its low-carbon solutions business that focuses on carbon capture, hydrogen, and alternative fuels, slashing 15% of its staff. Shell's new CEO has refocused on more profitable oil and natural gas projects. |
 Ford | Moving Forward Ford finally reached a deal with autoworkers to end the 6-week strike, boosting pay by 25% with cost of living adjustments for a total cost of $6B over four years. Ford lost over $1B from the production stoppage, and sales slowed. |
 United Parcel Service | Recovered Reputation The world's largest delivery company took a significant sales hit this summer from a slower economy and uncertainty around its workers. UPS has started recovering clients lost when its 340,000 drivers threatened strikes for better pay. |
 Northrop Grumman | War Profits Northrop Grumman benefitted from the tense geopolitical landscape last quarter, reporting a jump in profit driven by surging sales of missile systems for Ukraine. The defense giant expects ongoing conflicts to boost sales this quarter. |
 Amazon | Lean Machine Amazon has more than tripled its profits by slashing costs, including nearly 30,000 employees, and boosting revenue with advertising and successful Prime Day sales. Amazon's cloud growth has slowed amidst competition from Microsoft and Google. |
(These links only work for 24 hours while the story is live.)
Thoughts on the new company scoop format? |
Inside Scoop 🤓
How does Gross Domestic Product (GDP) tell us about 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 (+4.9%), 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 (+1.2%) and not representative of the growth/decline over the past year (+2.9%). Annualizing the past quarter’s change makes the backward-looking number a little more forward-looking.
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