 Monthly Market Analysis August 2024 Economy United States Last month the U.S. economy provided additional evidence that it is slowing down. Although, the American economy added 206,000 jobs in last month’s employment report, the unemployment rate increased from 4.0% to 4.1%. The U.S. labour force is expanding as more Americans, that left the workforce and stopped looking for work, are now job hunting again. Consumer spending is slowing as retail spending showed 0% growth in the latest monthly data from the U.S. Bureau of Economic Analysis. U.S. consumer loan utilization has grown by 4.84% in the last year and the U.S. consumer savings rate fell from 4.1% in February of this year to 3.6% in April. Overall, the U.S. consumers’ economic position is weakening. The U.S. inflation rate is trending down, it fell from 3.3% to 3.0% during the month of June. The moderation in the rate of inflation did not satisfy the U.S. Federal Reserve’s requirement to lower interest rates in their July meeting. The U.S. Federal Reserve kept interest rates unchanged at 5.5%. On a positive note, in the second quarter of this year, GDP (a measure of the size of the economy) grew by 2.8%. A faster than expected rate of growth. Canada The Canadian economy is still showing signs of economic stress. Based on last month’s job report, Canada lost -1400 jobs, and the unemployment rate increased from 6.2% to 6.4%. Canadian consumers cut back on spending causing retail sales to decline by -0.8% in the last monthly report. The Canadian Household Savings Rate last measured in the fourth quarter of 2023 was 6.2%, a much higher rate than the United States and a higher rate than 2020, before the pandemic. The relatively high savings rate should help Canadian households weather an economic downturn. Canada’s inflation rate decreased from 2.9% to 2.7% in the latest data based on the month of June. Given the slowing rate of inflation and a weaker economy, the Bank of Canada decided to cut interest rates in their July meeting, from 4.75% to 4.5%. Markets Extreme volatility returned to the global financial markets last month. The broad U.S. stock market (S&P 500 Index) was able to eke out a positive 1.13% gain last month, but it wasn’t easy. Many of the largest technology company stocks in the U.S. were down last month. The Nasdaq composite index, which holds a larger weighting of technology related companies was down -1.63%. The Canadian stock market represented by the TSX composite index was up 5.65% last month. Last month, oil prices were down by -5.92%, but an upward 5.06% move in the price of gold helped Canadian mining stocks increase in value. Current U.S. market volatility is driven by a trifecta of investor concerns: U.S. election dynamics, prolonged high inflation, and the possibility of a recession. Since, these concerns are not likely to be resolved in the near term; volatility should be expected over the next few months. 1 (Source: Bank of Canada) 2(Source: Statistics Canada) 3(Source: United States Bureau of Labour Statistics) 4(Source: United States Federal Reserve) 5(Source: United States Census Bureau) 6(Source: Koyfin as of July 31,2024) |
| * This information has been prepared by Desmond Rubie, BCom, CIM®, CFP®, who is a Wealth Advisor for Rubie Wealth Management Group at iA Private Wealth. Opinions expressed in this article are those of Desmond Rubie, BCom, CIM®, CFP® only and do not necessarily reflect those of iA Private Wealth Inc. IA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates. Desmond Rubie, BCom, CIM®, CFP® Wealth Advisor Rubie Wealth Management Group | iA Private Wealth 26 Wellington Street East, 2nd FloorToronto, ON M5E 1S2 T: 647-429-3281 ext. 240018 Desmond.Rubie@iaprivatewealth.ca iaprivatewealth.ca |
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