US Growth

At 1330 this afternoon, attention will turn to the release of preliminary US GDP figures as markets look for further insight into the health of the economy and the extent to which this could influence the Federal Reserve’s monetary policy pathway.

Here, the general market consensus is pointing to a 2.8% (annualised) print for growth across the second quarter of the year.

Though recessionary fears may have subsided due to a string of encouraging data this month (such as US retail sales, durable goods orders and preliminary growth figures), generally speaking the front end of August saw such concerns resurface as markets considered how the Fed’s eighth consecutive hold could hinder growth. For example, at the start of August, JP Morgan upwardly revised their forecasts of a recession by 10 percentage points to 35% while Goldman Sachs similarly raised their forecasts by 10 percentage points, to a 25% probability of a recession in the next 12 months.

This came in the wake of unemployment rising unexpectedly to 4.3% – its highest since October 2021 – as nonfarm payrolls came in at 144,000, well below the rolling year average of 215,000. Such figures in the labour market point to an easing off in the pace of US growth.

That said, US growth continues to outpace that of other major economies, and the 2.8% forecast would well surpass Q2 annualised growth for the UK (0.9%), Germany (0%) and France (1.1%).

The US economy has also grown some 8% between Q4 2019 and Q4 2023, similarly surpassing the growth seen across the UK, Germany, France and Japan whose economies all expanded less than 2% over the period.

Alongside its impact on the Fed, today’s figures will also be closely monitored given its potential impact on the US elections. While the economy is not the only factor in the elections, as one journalist writing in the economist indicated “An outright recession would probably spell doom for Ms Harris. But even if the economy is only cooling, as is likely, it could harm her and help Donald Trump.”

Research from the EU’s climate service has shown that July 2024 was the second-warmest July on record.

Here, the Copernicus Climate Change Service identified that July was 1.49°C above the 1991-2020 average and was 1.48°C above the pre-industrial (1850-1900) average.

This marked an end to thirteenth consecutive months which saw global monthly temperatures breach new average records.

When looking at the last year through to July, the global-average temperature was 0.76°C above the 1991-2020 average and 1.64°C above the 1850-1900 pre-industrial average.

This comes against the target laid out during the Paris COP21 conference in 2015 which saw leaders around the world pledge to keep global warming within a 1.5C threshold of preindustrial levels.

Earlier this year, the UN’s World Meteorological Organization predicted that there was an 80% chance that such a threshold would be breached within the next five years.

The survey also identified that the global average sea surface temperature came in at its second highest level for the month of July at 20.88°C.

When looking at sea ice extent, Arctic Sea ice was 7% below average while Antarctic Sea ice extent was 11% below average.

Alongside US GDP, at 1330 this afternoon attention will also tun to preliminary PCE results in addition to initial jobless claims out from the US. This morning, Eurozone Business and Consumer confidence data is also released at 1000. This comes ahead of preliminary German inflation figures at 1300, where the market is pointing to a 2.1% print.