September 2018
Non-Operating
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National Non-Operating Observations
The U.S. economy continued its strong run in August. The Bureau of Economic Analysis increased its second quarter GDP growth estimate from 4.1 percent to 4.2 percent, the biggest single-quarter GDP growth estimate since 2014. U.S. employment continued the consistent growth it’s shown since early 2011, reporting 201,000 new jobs in August, slightly higher than the 12-month trailing average. U.S. unemployment held steady at 3.9 percent, marking the fifth consecutive month this measure has been at or below 4.0 percent.
Foreign trade developments have been hanging over the capital markets for several months. The U.S. and Mexico reached a tentative agreement on revisions to NAFTA in late August, but negotiations with Canada are ongoing. Trade tensions with China persist, with limited near-term prospects for resolution. In mid-September, the Trump Administration announced measures affecting an additional $200 billion of Chinese imports.
Emerging markets have been a recent focus of investors, with Argentina and Turkey suffering sizeable currency depreciations against the dollar, driving fears of contagion in other economies and debt crises in countries with large dollar-denominated obligations.
Federal Reserve Chair Jerome Powell spoke in August at the Jackson Hole Economic Policy Symposium to reiterate the approach of gradual increases of the target range for the federal funds rate, and a theme of risk management to monetary policy. Federal Open Market Committee (FOMC) minutes released in August did not change the view of two additional rate hikes this year. The next FOMC meeting will be held on September 25 and 26. A recent survey of economists puts the odds of a rate increase at 91 percent.
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National Observations
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