Economic Update 8/21/26
Top Five Takeaways
· We continue to view the economy in a positive manner going forward.
· Manufacturing within the state of New York is growing at its fastest level since 2021.
· Recent indications are showing the affordability of home purchases to be improving.
· We believe the equity market represents good value going forward and we are adding to positions in a controlled manner.
· We expect interest rates to decline significantly by year-end.
This has been a relatively light week in terms of economic releases, but that doesn’t mean we haven’t seen some critical numbers regarding the ongoing direction of the U.S. economy. As you will see, we continue to view the economy in a positive manner going forward.
NY Empire State Manufacturing Index
I think one of the more important, but often overlooked economic indicators, is the NY Empire State Manufacturing Index. This provides a monthly outlook for manufacturing within the state of New York. The Index rose 20.6 for the current month. This compares in a positive relationship to the 15.6 level in July. It also represents the fifth consecutive monthly rise for manufacturing within the state.
Currently, manufacturing within the state of New York is growing at its fastest level since 2021. This is a good indicator for additional employment growth for the manufacturing sector in total.
Affordability of Home Purchases
Another economic indicator was in the Housing sector. Housing Starts for July declined by 12.40% compared to the June level. This was the third decline in the past four months, with starts at an annualized rate of 1.239 million units. Multi-family homes declined by 15.6%, while single-family homes fell by 9.9%.
Fortunately, Building Permits actually rose by 5% in July. Recent indications are showing the affordability of home purchases to be improving. Hopefully, the rise in building permits is a good indication a positive trend is now here.
Industrial Production
Last month also showed Industrial Production increased domestically for the fourth consecutive month. The increase was 0.2%, following a rise of 0.3% during June. We have now seen four straight monthly increases. Manufacturing levels in the U.S. also rose 0.2% during July. On a year-over-year basis, Industrial Production rose by 1.10% in July. As we suggested earlier, these are good indicators of manufacturing strength returning in the U.S.. This has been a key component of President Trump’s economic initiative since returning to office.
Hopefully, our expectations of continued strengthening in the U.S. economy is correct. I believe the above provides support to this view. While we remain somewhat cautious, we do think the equity market represents good value going forward and we are adding to positions in a controlled manner. As we have been suggesting, we are adding to holdings outside of the technology and energy sectors. We also expect interest rates to decline significantly by year-end. We have been buying fixed-income securities where we see opportunities.
Hopefully, you are all enjoying the last few weeks of summer. Schools are mostly back in session and that means fall and football is coming. Go Big Red!!
