Weekly Economic Report 1.9.26

A deluge of data rolled in this week, clarifying that the US economy continues to outperform even the more upbeat forecasts, like our own. An extraordinarily strong trade report, which was doubly biased by swelling exports of gold and plunging imports of pharmaceuticals, boosted the Atlanta Fed’s GDPNow estimate to a whopping 5.4% for the fourth quarter – which is clearly an overstatement. Still, after the first quarter’s tribulations, GDPNow was adjusted to eliminate swings due to gold. However, the drop in pharmaceutical imports was not reflected in a decline in inventories – as that data is not available yet. For us the key is that their estimate rose, rather than falling below 3%. This is similar to our reading of the soft CPI – it may be wrong, but it was not rising. Bottom line, our view is that the K-shaped recovery is generating plenty of nominal growth for corporate profits, and modest growth in hiring is limiting costs – so productivity is booming! That is driving strong profits, which should sustain the investment led-cycle well into 2026.

EU01-09-2026.pdf

Download PDF • 280KB