AGF Logo
  • Home
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
  • Français
  • AGF.com
Skip to content
AGF logo
Insights and Market Perspectives
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
  • Contributors
  • Français
  • Search
Search
Close
The Big Summer Surprise — A Red-Hot Economy

  • Industry and Expert Views

For Print Only Logo
Insights and Market Perspectives

The Big Summer Surprise — A Red-Hot Economy

Author: Greg Valliere

August 17, 2023

COULD THE U.S. ECONOMY be growing at close to 6% this summer? The closely watched Atlanta Fed GDPnow released its latest guesstimate of economic growth yesterday — a red-hot 5.8% surge is possible this quarter, according to the forecasters.

WE TAKE THIS WITH A GRAIN OF SALT: The GDPnow survey has a mixed track record, and anything over 5% this quarter seems unlikely. But there’s no question that the economy is hitting on all cylinders.SURGING DEMAND was detailed this week in a Washington Post article headlined: “What Recession? This Summer’s Economy is Defying the Odds.”

THE ARTICLE CITED RED HOT DEMAND everywhere as spending surges in several areas. Consumers are spending on plastic surgery, cruises, pet care, Taylor Swift and Beyonce concerts, the “Barbie” movie, motorcycles and dozens of other discretionary outlays. Cruise bookings for 2024 are at an all-time high.

THIS SURGE OF PENT-UP SPENDING appears likely to avoid recession, which was a huge fear earlier this year; the big take-away now is that the economy has entered a period of unexpected expansion. With unemployment near 50-year lows, inflation edging down and wages rising faster than prices, businesses and families are still spending, keeping the labor market in very solid shape.

WARNING SIGNS; There are signs of potential trouble — Americans are taking on record levels of debt to fuel their spending, and delinquencies on mortgages and car loans are inching up. And there are persistent fears that the 10-year bond yield could continue to soar, eventually driving the economy into a slowdown.

FOUR IMPLICATIONS:

First, the Federal Reserve may have to stay tighter for longer, even though FOMC minutes released yesterday indicated an aversion to much more restraint.

Second, the U.S. appears to be in much better economic shape than China, Russia and much of Western Europe.

Third, continued strong GDP growth could help Joe Biden, who still looks vulnerable in the 2024 election.

Fourth, inflation remains the elephant in the room, as commodity prices surge and organized labor seeks dramatic wage gains.

BOTTOM LINE: At least one more rate hike seems likely this fall as the Fed — behind the curve as always — grapples with this unexpected economic surge. As for speculation on rate cuts later this year, that seems absurd. Rate cuts look unlikely for the rest of this year as GDP growth exceeds expectations.
* * * * *
EDITOR’S NOTE: With Washington nearly deserted, we’ll publish only two or three times a week through the end of August.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

Also Read

  • Investing and Market Views

Market Quote: Oil Prices, Dividend Stocks, U.S. Treasuries  

September 29, 2023

  • Investing and Market Views

Sustainable Investing: Can Institutional Investors Have Their Cake and Eat it Too?

September 28, 2023

  • Investing and Market Views

Big Picture: Investors Not on the Defensive, Despite Talk of Recession

September 26, 2023

  • Investing and Market Views

Big Picture: Growth Vs Value

September 19, 2023

Get perspectives straight to your inbox.

Subscribe now

More articles like this

Ten Key Themes as a Chaotic Weekend Looms

  • Industry and Expert Views

Ten Key Themes as a Chaotic Weekend Looms

Greg Valliere | September 29, 2023

Timely insights from inside Washington.

Who Won Last Night?

  • Industry and Expert Views

Who Won Last Night?

Greg Valliere | September 28, 2023

Timely insights from inside Washington.

A Glimmer of Hope on Budget; Plus — What Would Democrats Require to Bail out McCarthy?

  • Industry and Expert Views

A Glimmer of Hope on Budget; Plus — What Would Democrats Require to Bail out McCarthy?

Greg Valliere | September 27, 2023

Timely insights from inside Washington.

AGF Logo
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights

Follow AGF

AGF Web Site Pages © 2023 AGF Management Limited. All rights reserved.

  • Terms & Conditions
  • Privacy
  • AGF.com