Monday is here, so let’s look at the state of play.
Preliminary data for July shows that the US economy started the current quarter on a solid footing. The services sector expanded at the quickest rate since 2022, while manufacturing output contracted for the first time since January. Employment in both sectors continued to expand at a more muted pace, and average prices charged for goods and services rose at one of the slowest rates in the past four years. The GDP report for the April-June period is expected to show a slight pickup in growth after the first quarter but a pullback from stronger growth rates seen last year.
And more good news from Friday’s reports – the GDP report shows that economic slowdown fears have been put to rest, with growth surging in the second quarter to 2.8%. The consumer (2.4%) and capital (5.2% annualized) spending rates were key drivers of solid economic growth, while businesses stocked up inventories at a strong rate. Despite the high interest rate environment, the U.S. economy remains resilient. Other data, such as jobless claims and durable goods orders, also align with a positive growth outlook.
According to the Consumer Technology Association (CTA), U.S. consumer tech spending is projected to grow slightly by 1% in 2024 and experience a 4.4% growth in 2025, reaching $505 billion and $527 billion, respectively. This growth follows declines in the consumer tech market in 2023 and 2022 due to inflation, slow economic growth, and supply chain effects from the pandemic. The CTA also expects hardware sales to bounce back in 2025, while services will help drive industry sales in 2024.
My favorite two indices, the Russell 2000 and the S&P 600, are up .93% and 1.44%, respectively, over the past five days.
Why do we care?
There is some good news, particularly services growth. I will focus on the customer impact—this means the typical target for IT services, which is often other services organizations, is trending up. One would hope that means investment in growth and, thus, technology.
I highlight the CTA data because small businesses often look more like consumers than enterprise businesses or those tracked by the stock market. This should be another positive sign.