TRG Fast Facts

By TRG Advisors on August 2, 2023

Weekly data-driven insights on the markets and economy

1. Back in the Black

Stocks rose again last week, boosted by data consistent with a soft economic landing. The S&P 500 gained 1.03% during the week, bringing its year-to-date return to 20.47% ― more than reversing its -18.11% loss in 2022.[i] CNN Business’s Fear & Greed Index, which ranges from 1–100 based on seven indicators, remains in “extreme greed” territory at 77, although it has fallen from 84 one month ago.[ii]

2. Cool Runnings

Cooler inflation and wage growth data were among measurements cheered by the market last week. Employment costs rose 4.5% year-over-year (y/y) in the second quarter, down from 4.9% y/y the prior quarter.[iii] Core personal consumption expenditures (PCE), the Fed’s preferred inflation metric, slowed to 4.1% from 4.6% y/y at the end of the previous quarter and from its 2022 peak of 5.4% y/y.[iv]

3. Miracle Grow

The release of second quarter U.S. GDP last week also supported the soft-landing narrative, coming in at a 2.4% annual growth rate versus an expected 1.8% rate.[v] Larger drivers of the higher-than-expected rate included business investment, with a 0.99% contribution (up from a 0.08% contribution in the first quarter), and services, with a 0.95% contribution (down from 1.44% in the first quarter).[vi]

4. Small Surprises

Among the 51% of S&P 500 companies that had reported second quarter earnings as of last week, the blended (actual results combined with estimated results for companies yet to report) earnings decline was -7.3%, up from -9.1% the week prior. The number of companies reporting positive earnings surprises (80%) has been above the five-year (77%) and 10-year averages (73%), while the magnitude of their surprises (in aggregate, 5.9% above estimates) is below the five-year (8.4%) and 10-year (6.4%) averages.[vii]

5. Slower Roll

While the U.S. labor market remains relatively strong, it continues to show signs of slowing. For example, in June, the percentage of small business owners planning to create new jobs in the next three months (15%) fell four points from May and 17 points below its record high in August 2021 (32%).[viii] Also, as of June, the three-month moving average for nonfarm payrolls (244,000) had fallen nearly 30% since this year’s peak in January (334,000).[ix]

6. Sliced Bread

After falling to 65% in the second quarter of 2020, the employment rate of women between the ages of 25–54 rebounded during the first quarter this year to its highest level (74.8%) since the data series began in 1977 (when it was about 54%).[x] Women are now the primary earner in about 16% of marriages and equal breadwinner in about 29% of marriages ― up from 5% and 11%, respectively, in 1972.[xi]

7. The Big Chill

Warmer weather will likely provide a boon to air conditioner manufacturers while challenging global electricity grids. In July, after the hottest June on record, Google searches for air conditioners rose 25% worldwide compared with averages over the past decade. While 90% of households in the U.S. and Japan have air conditioners, only 15% of households in Southeast Asia and 5% in India and Africa have one.[xii]

8. Big Brew-haha

From 2001 to 2021, breweries, distilleries and wineries grew from accounting for only 1,528 (41%) of total establishments in the beverage manufacturing industry to accounting for 12,133 (84.5%) of total establishments. Net employment during this same time frame increased by 238% at breweries, 214% at distilleries and 177% at wineries.[xiii]

9. The Debt of Nature

Researchers studied the “big five” personality traits ― openness to experience, conscientiousness, extroversion, agreeableness and neuroticism ― in relation to certain financial account statuses. They found that those who carry unpaid credit card debt tend to be less conscientious, more open and more agreeable; 45% of cardholders they studied had revolved credit card debt at some point over the past year.[xiv]

10. Running Mates

Sean McQuaid, a 33-year-old runner originally from Northern Ireland, and his teammate Riley Pathman, a 24-year-old who was born with cerebral palsy, have set a new world record ― two hours, 35 minutes and 26 seconds ― for the fastest marathon run while pushing a wheelchair. McQuaid has completed 12 marathons since October 2020. Pathman and his father, who is currently sitting out due to a knee injury, have participated in 30 full marathons, 150 half-marathons and 100 triathlons.[xv]

[i] FactSet total returns as of July 28, 2023.

[ii] CNN Business, Fear and Greed Index, as of July 28, 2023, https://www.cnn.com/markets/fear-and-greed. Accessed July 31, 2023.

[iii] U.S. Bureau of Labor Statistics, Employment Cost Index: Total compensation: All Civilian [ECIALLCIV], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/ECIALLCIV. Accessed July 31, 2023.

[iv] U.S. Bureau of Economic Analysis, Personal Consumption Expenditures Excluding Food and Energy (Chain-Type Price Index) [PCEPILFE], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/PCEPILFE. Accessed July 31, 2023.

[v] Mutikani, Lucia, “U.S. Economy Defies Recession Fears with Strong Second-Quarter Performance,” Reuters, July 27, 2023, https://www.reuters.com/markets/us/us-economic-growth-accelerates-second-quarter-weekly-jobless-claims-fall-2023-07-27/. Accessed August 1, 2023.

[vi] Bureau of Economic Analysis, “Gross Domestic Product, Second Quarter 2023 (Advance Estimate),” July 27, 2023.

[vii] Butters, John, “S&P 500 Earnings Season Update: July 28, 2023,” FactSet, July 28, 2023, https://insight.factset.com/sp-500-earnings-season-update-july-28-2023. Accessed July 31, 2023.

[viii] NFIB, “NFIB Jobs Report: Small Businesses Increasing Compensation Eases in June,” https://www.nfib.com/foundations/research-center/monthly-reports/jobs-report/. Accessed July 31, 2023.

[ix] U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm [PAYEMS], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/PAYEMS. Accessed July 31, 2023.

[x] Organization for Economic Co-operation and Development, Employment Rate: Aged 25–54: Females for the United States [LREM25FEUSQ156S], retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/LREM25FEUSQ156S. Accessed July 31, 2023.

[xi] Aragao, Carolina;, Richard Fry, Kiley Hurst and Kim Parker, “In a Growing Share of U.S. Marriages, Husbands and Wives Earn About the Same,” Pew Research Center, April 13, 2023, https://www.pewresearch.org/social-trends/2023/04/13/in-a-growing-share-of-u-s-marriages-husbands-and-wives-earn-about-the-same/. Accessed July 31, 2023.

[xii] Howarth, Nicholas, Clara Camarasa, Kevin Lane and Arnau Risquez Martin, “Keeping Cool in a Hotter World is Using More Energy, Making Efficiency More Important Than Ever,” IEA, https://www.iea.org/commentaries/keeping-cool-in-a-hotter-world-is-using-more-energy-making-efficiency-more-important-than-ever. Accessed August 1, 2023.

[xiii] Ewing, Timothy, Karl Kever, Yaa Opoku-Agyeman and Anya VrabieBureau, “A Look at a Neat Industry: Distilleries,” U.S. Bureau of Labor Statistics, June 2023, https://www.bls.gov/spotlight/2023/a-look-at-a-neat-industry-distilleries/home.htm. Accessed August 1, 2023.

[xiv] Greene, Claire, Oz Shy and Joanna Stavins, “Personality Traits and Financial Outcomes,” Federal Reserve Bank of Boston Research Department Working Papers No. 23-4, https://doi.org/10.29412/res.wp.2023.04. Accessed July 31, 2023.

[xv] McCracken, Niall, “Tyrone Runner Helps Set New Wheelchair Marathon Record,”BBC, July 31, 2023, https://www.bbc.com/news/uk-northern-ireland-66313138. Accessed August 1, 2023.