Registered Investment Adviser Caleb Lawrence
Despite generally positive data the major averages opened lower, recovered late and enter the final hour about even. Since Monday the Standard and Poors 500 Index is more or less unchanged while the NASDAQ has given up 15 points or nearly ¼%.
Preliminary 2nd quarter Gross Domestic Product or GDP matched expectations at 2.6%. The inflation measuring price deflator fell by half from the Fed’s desired 2% to just 1% as price pressures remain muted. Real disposable income increased a respectable 3.2% in the second quarter. Consumer spending was a real standout accounting for nearly 75% of the gains achieved in the 2nd quarter. The 1st quarter was revised down .2% to 1.2%.
2nd quarter employment costs advanced .5% on a .6% gain in benefit expenses and a .5% increase in wages. On a year ago basis private wages are up 2.4% matching the gain in total compensation.
Vehicle sales data will be released Tuesday. Expectations are for a fifth consecutive month below 17 million units seasonally adjusted. Additional data from JD Power indicates that despite record incentives and inventory sales are expected to fall 5%. Sooner or later the falling auto sales figures and record dealer inventories are going to force meaningful production cuts that will negatively impact durable goods, manufacturing and retail sales of which autos are a large component.