Weekly economic review & outlook
Spending fundamentals fading a bit
October 05, 2021
You Need to Know
Week in review
Consumers less confident in the outlook?
The Conference Board’s consumer confidence index fell sharply again in September as Delta variant concerns and pandemic weariness reduced future growth expectations. But the University of Michigan’s consumer sentiment index rose slightly for the month.
Manufacturing strength continues despite widespread supply issues
Although the ISM manufacturing index still showed solid expansion for September, there has been no easing of constraints for the supply of inputs or workers.
Growth in services should be slower, but still strong
We project a decline in the ISM services index to 60.5 for September. While this would be lower than the level in several months of this year, it would nonetheless be higher than most of the series’ history (data back to 1997) — indicating significant strength in the services sector of the U.S. economy.
A rebound expected for nonfarm payrolls
We expect a rebound in payroll employment with a gain of 570,000 plus an upward revision to August’s figure. Additionally, look for another drop in the unemployment rate.
Consumer spending surged in the first half of 2021, fueled by record levels of fiscal stimulus, strong job/income gains, and pent-up demand for activities held back by government shutdowns. Not surprisingly, the pace of spending has slowed in recent months as the stimulus effects sunset and the reopening spike settled back into normal spending patterns. But the lingering pandemic and rising costs caused by supply constraints have cut into activity more than previously thought, helping to slow economic growth in the third quarter.