Weekly Market Commentary 09/15/2017

The back-to-back disruptive hurricanes make reading the economic tea leaves a bit more challenging. As expected, Hurricane Harvey did have a significant impact on production along the Gulf Coast, slashing utility output, reflecting electricity outages, and cutting deeply into mining operations, as output of oil and natural gas tumbled. But Harvey struck too late in August to have a meaningful impact on the demand side of the economic ledger, so the surprisingly weak reading on retail sales for the period may be telling. Keep in mind that consumer spending was the main driver of the growth rebound that occurred in the second quarter, as personal consumption expenditures increased by a solid 3.3% annual rate. That was up considerably from the 1.9 % first quarter pace and accounted for 76% of the 3.0% growth rate in GDP during the April-June period. What’s more, the initial estimate of July retail sales indicated that the momentum carried over into the third quarter.