What We Learned Last WeekCorporate earnings rose in the 2nd quarter As of July 20, 87 S&P 500 companies have released their 2nd quarter data. Of these companies, 83.9% surpassed analysts’ estimated results. In fact, the earnings season is going well enough that analysts have increased their growth projections. They now expect to see companies average 22% earnings growth over the past year, up from 20.7% growth projections on July 1. Retail sales increased The most recent retail sales data indicated that consumers feel confident in the economy and labor market. June’s strong growth, coupled with upward revisions to May’s results, support predictions for healthy Gross Domestic Product (GDP) increases in the 2nd quarter. Industrial production hit a new record In June, U.S. manufacturing and mining increased. Overall, industrial production had an annual rate that was 6.1% higher in the 2nd quarter than the 1st quarter of 2018. Housing starts dropped The latest housing-start report came in far below estimates. This decline occurred across all U.S. regions as homebuilders shared concerns about materials costs and labor shortages. However, housing start data often fluctuates from month-to-month, and reports show that the 1st half of 2018 is 7.4% higher than the same time period last year.
What Is Ahead This WeekCorporate earnings season continues, and on Friday, we’ll receive the initial reading of 2nd quarter GDP. Last week’s retail sales and industrial production numbers contribute to very high expectations for economic growth results. Some estimates indicate that GDP could have increased as much as 5.2% in the 2nd quarter – much higher than the 2% growth between January and March. We will watch these results closely and look for additional perspectives on the economy’s underlying strength. If you’d like to know more about what may lie ahead, contact us any time.
ECONOMIC CALENDARMonday: Existing Home Sales Wednesday: New Home Sales Thursday: Durable Goods Orders, Jobless Claims Friday: GDP, Consumer Sentiment
Quote Of The Week
“It takes as much energy to wish as it does to plan.” – Eleanor Roosevelt