Economy in Brief

• Deficit: $118.8 bil. in July, up $17.4 bil. (+17.2%) from June’s $101.4 bil.
• Exports -2.9%, third straight m/m decline to a six-month low, driven by an 11.2% drop in industrial supplies & materials exports.
• Imports +3.7%, fifth rise in six mths. to highest level since Mar. ’25, led by an 11.3% rebound in nonauto capital goods imports.

• New claims declined by 4,000 to 203,000 in the week of August 22.
• Continuing claims declined by 18,000 to 1.778 million in the week ending August 15.
• The insured unemployment rate was unchanged at 1.2% in the week of August 15.

• Headline and Core PCE price measures cooled in the last two months.
• Real spending stalled in July.
• Saving uptick should be viewed as a pause in the downtrend.

• The 1.5% q/q saar increase in real GDP reported in the advance report was not revised in the second estimate.
• Inventory investment and net exports continued to be meaningful drags on overall growth.
• The strong domestic demand growth reported in the advance report was revised even stronger.
• Corporate profits surged 9.1% q/q not annualized in Q2, the fastest quarterly advance since Q2 2021.

A dominant anxiety in financial markets remains the level of long-term interest rates. It is worth beginning, though, with the real economy, where the news of recent days has been more reassuring. Haver’s proprietary calculation of world GDP growth suggests the global economy held up well in the second quarter, expanding at close to its long-run average pace and defying the sharper slowdown many had feared (chart 1). The August flash purchasing managers’ indices tell a similar story, with most of the major economies both in expansion and still improving — though, as ever, the composite readings conceal a more uneven picture beneath (chart 2). From South Korea, whose trade figures are among the world’s most timely, comes the same message, and a pointed one about the artificial-intelligence boom: semiconductor exports have continued to surge (chart 3). Yet the market’s gaze stays fixed on US yields, and a decomposition explains why they are being watched so closely — the rise has come overwhelmingly from the real component, not from any meaningful revival of inflation expectations (chart 4). That, one might argue, is not a passing technical matter but a structural one, rooted in who is willing to fund the US government. The rest of the world now funds a steadily shrinking share of its debt (chart 5), and the surplus nations that once recycled their savings into Treasuries are turning, instead, to gold (chart 6). It is against this backdrop that Treasury Secretary Scott Bessent's recent remarks that the government may intervene in the market to support its debt have drawn attention.

• Both applications for loans to purchase and for loan refinancing declined in the latest week.
• Interest rate on 30-year fixed-rate loans edged up 1bp to 6.97%.
• Average loan size inched up in the August 21 week.

• Sales -10.5% m/m (-6.3% y/y) to 607,000 in July; down 19.8% from a November high.
• Sales m/m down in the Midwest (-42.7%) and South (-13.0%); up in the Northeast (+30.3%) and West (+6.2%).
• Sales y/y plunging in the Midwest (-50.6%); surging in the Northeast (+95.5%).
• Median sales price -2.3% m/m to $393,800, a five-year low; avg. price +4.1% m/m to $508,800.
• Unsold inventory +1.9% m/m (-1.6% y/y) to 488,000, highest since Oct. '25.
• Months' supply up to 9.6 mths., a six-month high.

• CFNAI down to -0.08 in July, negative for the second time in three months.
• Three of four CFNAI components down m/m; two make negative contributions.
• CFNAI-MA3 down to -0.04, second negative reading in three mths.; still above -0.70 (recession signal).
• CFNAI Diffusion Index down to +0.05, remaining positive for the fourth time in five mths.