This Week's State Of The Economy - What Is Ahead? - 22 October 2021

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Oct 25, 2021

This Week's State Of The Economy - What Is Ahead? - 22 October 2021

Restrictions from a renewed COVID outbreak in China, regulatory changes weighing on local financial markets and a potential collapse of Evergrande have all contributed to a slowdown in Chinese economic activity. In the U.K., inflation has been on an upward trajectory over the past few months. Reopening the economy combined with plush household balances have pushed price growth well above the Bank of England's inflation target




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The U.S. economy appears to be losing some momentum as the calendar turns to 2021 and the public health situation continues to deteriorate.

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The gain in output leaves the level of real GDP just a stone\'s throw below its pre-COVID Q4-2019 level (see chart).

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Housing starts jumped 5.8% during December. Single-family starts soared 12%, while multifamily starts dropped 13.6%.

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Supply chain bottlenecks continue to cause pain-in-the-necks. In spite of all the difficulties, the Economic whizzes in the WF Economics team have upgraded their forecast for full-year 2021 U.S.

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Mild weather helped housing starts surge 16.9% in December to a 1.61 million-unit pace, the highest in 13 years. Manufacturing surveys from the New York Fed and Philadelphia Fed both rose more than expected in December.

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In the second installment of our series on economic risks in the foreseeable future, we analyze the potential for higher inflation in coming years stemming from excess demand.

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The international economic news over the past week has been somewhat mixed. On the positive side, China’s October data showed ongoing growth in manufacturing and firming retail and service sector activity.

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The release of the transcript of President Trump\'s phone conversation with Ukraine President Volodymyr Zelenskiy and the whistle blower complaint overshadowed most of this week\'s economic reports and took bond yields modestly lower.

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Retail sales rose just 0.1% over the month, falling short of consensus and suggesting that consumers may finally be feeling some spending fatigue.


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