The Great American Summer | a job

US GDP confirmed the fantastic summer experienced by US households with an increase of 4.9%, the best quarter in two years. Consumption grew 4% year-on-year driven by services. Among the most notable influences are the mass phenomenon created by Taylor Swift and Beyoncé’s tours, as well as the huge success of films such as Barbie and Oppenheimer.

These three events alone are estimated to have contributed 0.5 percentage points to growth this quarter. Both films have a global gross of $2.4 billion, and Swift’s show is expected to generate $5 billion between tickets, accommodations and product sales. For example, the average fan spends $1,300 to attend concerts, especially due to high resale prices. These signs point to a strong consumer thanks to the savings accumulated after the pandemic. Likewise, lower household debt plays an important role – 72% of GDP, down from 97% in 2009 – and homeowners with a mortgage are less sensitive to rising interest rates, as about 86% of the mortgage stock in the U.S. United States is 10%. Fixed rate.

However, from now on, things will be more difficult. On the one hand, consumers will see their financial capacity more constrained — the extraordinary shortfall in student loans that ended in September — and the savings stored up after the pandemic nearly exhausted. On the other hand, business investment was negative during the quarter (-0.1%), indicating greater caution on the part of managers. Finally, real estate investment, which improved this quarter (3.9%), faces the following periods with mortgage rates of 8%, the highest in 20 years, which would undermine its development.

On the positive side, growth stagnation could persist in the coming quarters and maintain the economy’s current resilience. In addition, consumers prefer wage growth above inflation (4.2% compared to 3.7%) and unemployment near the lower bound (3.8%). This optimism has triggered a high penalty on bonds, which are down 4% since August. If the year ends like this, it will be the first time losses have been recorded for three consecutive years for this asset.

The North American economy is approaching the winter season without the brilliance of its stars, which have already completed a large part of their American tour. All this in an environment where the consumer sees his financial ability weakening. This normalization in growth and lower inflation will be favorable for fixed income, allowing us to leave behind a tough summer for bonds, which saw the same emotional ambiguity as Taylor Swift’s song Good news for the economy was a time of uncertainty for fixed income investors.

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