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Weekly economic review & outlook Mostly weaker economic data

August 23, 2021

You Need to Know

Week in review

Large decline for retail sales in July

Retail sales fell sharply for July, led by substantial drops in auto, clothing, and non-store (online) sales.

Housing starts fall amid supply constraints

While builders are likely building near capacity, labor and lot shortages plus elevated construction costs resulted in a slower pace of housing starts.

Week Ahead

Forecasts

Modest decline expected for existing home sales

Demand is still strong, but a very low supply of homes for sale and soaring prices are expected to result in a modest decline in existing home sales, as indicated by a drop in pending home sales.

Core inflation expected to slow, but remain high

With transitory impacts on prices beginning to wane, we expect July’s core inflation reading to be the slowest since February, although the monthly gain should still be rapid.

Recent economic data have generally been below expectations, as the COVID Delta variant is starting to show some negative impacts on activity, although only modestly thus far. Not all the data have been worse than predicted, with industrial production jumping strongly for July. The July FOMC minutes and Fed speakers appear to have accelerated the timetable for the tapering of asset purchases. Overall, the data continue to show a solid expansion, even if it is at a slower pace than what has been seen in the past few quarters.

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