SxHx Economic Health Report: Q3 2023

With the list of Chinese firms on the U.S. microelectronic export blacklist growing, the House’s passing of H.R. 4394, unemployment at 3.8%, and consumer spending up, economic confidence is relatively high across the board. For now.

Last month The Department of Commerce’s Q3 report, Bureau of Economic Analysis (BEA) reported a 4.9% increase in real GDP, exceeding expectations. This spending hike is based on overall consumer zealousness and, while temporary, this may stave off any kind of harsh economic fallout for the time being.

“Last quarter, the U.S. economy grew at a staggering 4.9%,” said Commerce Secretary Gina Raimondo. “That’s the biggest GDP gain in years and more proof that Bidenomics is working.”

While some would automatically jump to crediting the president for the economy’s success, many economists note a myriad of factors. Some of these factors fiscal, some monetary, and some emotional. Manufacturing in technology and certain pharmaceuticals are on the rise. These two companies are ones that you should keep an eye on. Notably, Applied Materials (AMAT) and Vertex Pharmaceuticals (VRTX).

Applied Materials is a company that manufactures semiconductors, but also supplies equipment to produce coatings for flexible electronics and packaging. Vertex Pharmaceuticals is on the cutting edge of biopharmaceuticals. Specifically gene-editing therapies for cystic fibrosis.

The house’s passing of H.R. 4394 is being celebrated for its provisions that shoot for the construction of power plants, cybersecurity for grid safety, petroleum and oil shale reserve activities, Strategic Petroleum Reserve facility development, flood and storm damage reduction, and shore protection. The energy and water development bill is crucial for economic sustenance and national security.

With the release of their quarterly refunding statement, The Fed and FOMC announced Wednesday that they will keep rates unchanged at a 5.25% to 5.5% range. They will also reduce their balance sheet on the asset side. Next week they will be auctioning off billions of dollars in U.S. Treasuries to bring inflation down to the 2% target. The primary buyers will be hedge funds, the aggressive trading of which may cause unwanted volatility to a normally safe and liquid bond market.

Overall, I would grade the economy with a 72% health rating. Mainly because the ultimate success of the U.S. economy on the world stage depends on scaling up domestic energy operations, and right now our economy is being propped up by retail addiction.

Full report of current economic indicators can be found here.