Weekly Market Recap
Consumers less confident
Week in review
- Australia inflation -1.9% q/q
- U.S Fed holds rates, but warns on economic outlook
- Australia building approvals falls 4.9% m/m
- RBA policy setting meeting
- China Caixin PMI manufacturing
- U.S. labour market report
Thought of the week
The rise in new cases of COVID-19 in pockets around the world is the greatest risk to the economic recovery and is a reason why the rise in consumer confidence has stalled after a sharp rebound from the May low. This matters because for developed economies like Australia, the U.S. and the eurozone household spending accounts for between 55%- 70% of GDP when looked at by expenditure. A happy, healthy consumer that is willing to spend is always good for the economic outlook. The softening in sentiment may limit the release of the pent up demand created when households were under the more strict containment measures. While the July data does not make a trend there is a risk that the expected bounced in economic activity in the third quarter will be smaller than first anticipated. However, this should be thought of as a recovery delayed rather than a recession extended.
I get locked down, but I get up again
Consumer confidence, z-score
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