The latest insights from Commerce Trust on the economy, policy moves and market performance
U.S. Credit Rating. On August 2, Fitch’s Ratings downgraded its U.S. credit rating from the top AAA rating to AA+, noting concerns over the U.S. fiscal outlook over the next three years, the high and growing amount of government debt and the "steady deterioration in standards of governance over the past 20 years.” Treasury Secretary Janet Yellen announced she strongly disagreed with Fitch’s action, stating the downgrade was “arbitrary” and “based on outdated data.”
Inflation. The Consumer Price Index (CPI) climbed to 3.2% on a year-over-year (YOY) basis in July according to the Department of Commerce — the first increase in the rate of headline inflation in over a year. Meanwhile, the rate of core CPI, which strips out more volatile food and energy prices, dipped to 4.7% YOY. The July core CPI reading was the lowest rate in two years.
Jobs. U.S. employers added a below-expectations 187,000 jobs in July, while June and May’s job reports were revised down, a further indication that the labor market is cooling. The unemployment rate fell to 3.5% for the month from 3.6% in June, according to data released by the Bureau of Labor Statistics. Despite the cooling employment picture, the U.S. has had 31 straight months of job growth. In addition, over the past 16 months, the jobless rate has ranged between 3.5% and 3.7%,
U.S. Small Business. Confidence among “Main Street” business owners is up, but many U.S. small businesses still are worried about the state of the economy, according to the National Federation of Independent Business (NFIB.) In its monthly Small Business Optimism Index, the NFIB reported a 91.9 score for July, citing lingering inflation and the tight labor market as of concern. This rating was nearly a full percentage point increase over the previous month, but well below the index's 49-year average of 98.
Sources: The Wall Street Journal, Bloomberg, Department of Commerce, Bureau of Labor Statistics,
National Federation of Independent Business.
The opinions and other information in the commentary are provided as of August 14, 2023. This summary is intended to provide general information only and may be of value to the reader and audience.
Past performance is no guarantee of future results. This material is not a recommendation of any particular investment strategy, is not based on any particular financial situation or need and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance, or legal advice, and may not be relied on as such.
Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Diversification does not guarantee a profit or protect against all risk.
Commerce Trust is a division of Commerce Bank.
INVESTMENT PRODUCTS: NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE