Implications: Given recent equity market volatility, all eyes still need to be focused on high frequency data that comes out weekly and those figures show we are not in recession. Initial unemployment claims ticked down 1,000 last week to 404,000. The four-week moving average is 408,000 versus 440,000 in the Spring. Continuing claims for regular state benefits declined 55,000 to 3.67 million. Meanwhile, same-store chain store sales keep rising: up 2.8% versus a year ago according to the International Council of Shopping Centers and up 4.8% according to Redbook Research. Again, no sign of recession. On the trade front, the top-line data were almost a carbon copy of last month. The trade deficit was unchanged in August and exports and imports each slipped by the same tiny $0.1 billion. Underneath the headlines, there was more trade in oil, with more petroleum imports and exports. Trade in autos declined, with both lower imports and exports. We now have enough data to confidently forecast the trade portion of GDP in Q3, and it looks like net exports will add about 0.4 percentage points to the growth rate. If financial problems in Europe were affecting the US economy, we would expect to see that impact in the trade sector. So far, there is no evidence that European debt issues are affecting global trade flows – this is very good news.
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