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September Economic Review: Economic growth continues but slowed by supply constraints/Delta variant

September 14, 2021

Economic Review: Economic Review: Growth is slowing as Covid-caused supply chain issues persist (Page 3)

Growth was mostly solid for August, but it continued to be held back by supply constraints throughout much of the economy as well as an inability by many firms to fill open positions. A rise in Covid infections due to the Delta variant has resulted in only modest changes from consumers, but production continues to be impacted and this is slowing the pace of third-quarter growth. Most forecasters (us included) have reduced their projections for annualized real GDP growth to around 3.5 percent — down from around 7.0 percent just a couple of months ago.

Financial Markets Review: Equities higher again (Page 4)

The S&P 500 Index rose for a seventh straight month in August, exceeding 4,500 for the first time. Optimism lifted earnings expectations, adding to investors’ enthusiasm despite the growing possibility of higher corporate tax rates ahead. Longer-term interest rates edged higher in August, with the yield on the 10-year Treasury note rising toward the upper end of its recent range. In general, the commodities decline continued last month, but the price of natural gas rose dramatically as both domestic and international supply constraints persisted.

The Outlook: The Outlook: Supply constraints to linger (Page 5)

Among the defining characteristics of the current business cycle thus far have been widespread shortages of labor and materials occasioned by the pandemic. These constraints have helped to lift the inflation rate (at least temporarily) while also tempering the pace of economic expansion (despite its strength).

Go deeper with the full September report linked below.

NFM-11356AO.3