Macro Briefing: 11 September 2024

US household income rebounded in 2023, posting the first annual increase since the pandemic, according to new data published by the Census Bureau. Inflation-adjusted median household income rose 4% to $80,610 in 2023 vs. $77,540 in the 2022. Despite the statistical improvement, “For many households, they still don’t feel it,” says Beth Ann Bovino, chief economist at US Bank, in a reference to the lingering effects of inflation that spiked in 2022 but has been sliding ever since. While income rose in 2023, so did the poverty rate, which increased for a second year after pandemic aid provided by the government expired. The share of Americans living in poverty (defined by the Census Bureau) rose to 12.9% last year, up from 12.4 percent in 2022.

A Federal Reserve official on Tuesday announced changes to a proposed set of US banking regulations that cuts the extra capital that the largest institutions will be forced to hold. “This process has led us to conclude that broad and material changes to the proposals are warranted,” Fed Vice Chair for Supervision Michael Barr said in prepared remarks. “There are benefits and costs to increasing capital requirements. The changes we intend to make will bring these two important objectives into better balance.”
Imports of US container cargo in August jumped 12.9% over the year-ago level, reports trade data provider Descartes Systems Group. Meanwhile, a possible East Coast port strike lurks. “Should a general work stoppage occur on the U.S. Gulf and East Coasts, even a one-week shutdown could take 4-6 weeks to recover from, with significant backlogs and delays compounding with each passing day,” said AP Moller-Maersk, one of the largest container carrier operators.
The policy-sensitive US 2-year Treasury yield fell on Tuesday to 3.55%, the lowest since Sep. 2022. “Clearly the market wants to be long,” says Evelyne Gomez-Liechti, a strategist at Mizuho International. “However, I think we have rallied quite a lot, and unless we get a downside suprise in today’s CPI, I would expect a bit of consolidation around current levels ahead of the [Sep. 18] Fed meeting.”
US third-quarter GDP is projected to rise 2.5%, estimates the Atlanta Fed’s GDPNow model. The Sep. 9 nowcast indicates a slowdown from Q2’s strong 3.0% increase, but the current Q3 estimate still reflects a growth bias that, if correct, will keep the economy out of recession in the current quarter.
Crude oil futures closed on Tuesday at the lowest level since December 2021. “Crude Oil demand destruction one two punch from China and OPEC delivered the knockout blow today,” writes Bob Yawger, executive director of energy futures at Mizuho Securities, in a research note to clients yesterday. “Incredibly, the market is getting beat down while a tropical storm/hurricane churns up the US Gulf of Mexico oil patch.”