Month of August 2021

The benchmark indexes enjoyed a solid August, with the S&P 500 and the Nasdaq reaching record highs
multiple times during the month. In fact, the S&P 500 recorded its seventh straight monthly advance — its
longest streak of monthly gains since January 2018. Each of the benchmarks is well ahead of its 2020
year-end value, led by the S&P 500, followed by the Nasdaq, the Global Dow, the Dow, and the Russell
2000. Ten-year Treasury yields increased and crude oil prices fell, while the dollar and gold prices inched
higher.

Stocks climbed higher in August, despite a drop in consumer confidence amid the spread of the Delta
variant and the possibility of travel restrictions. Growth and technology shares outperformed cyclicals. Each
of the market sectors gained, with only the energy sector sliding lower. Financials and communication
services advanced the most.

Federal Reserve Chair Jerome Powell may have done enough to help calm investors' concerns by
promoting the idea that interest rates will remain at their current level for some time, although a reduction in
the bond-buying stimulus program may begin before the end of the year. Inflationary pressures continued
to rise as prices at the consumer and producer levels increased in July.

Second-quarter GDP showed the economy expanded by nearly 7.0%. Sales of existing and new homes
advanced, as prices for new single-family homes rose, while prices for existing homes slid. Industrial
production increased. Close to 1.0 million new jobs were added in both June and July, while the
unemployment rate and the number of unemployment claims fell.

• Employment: There were 943,000 new jobs added in July, keeping up with the pace of June's upwardly
  revised estimate of 938,000 new jobs. Employment in July is up by 16.7 million since April 2020 but is
  down by 5.7 million, or 3.7%, from its pre-pandemic level in February 2020. Notable job growth in July
  occurred in leisure and hospitality (+380,000), with over half of the job gain coming from food services
  and drinking places (+253,000). Job gains also occurred in local government education (+221,000) and
  private education (+40,000), professional and business services (+60,000), and transportation and
  warehousing (+50,000). In July, the unemployment rate declined 0.5 percentage point to 5.4%, with the
  number of unemployed persons falling by 782,000 to 8.7 million. These measures are down
  considerably from their recent highs in April 2020 but remain well above their levels prior to the
  pandemic (3.5% and 5.7 million, respectively, in February 2020). Among the unemployed, the number of
  persons on temporary layoff dropped by 572,000 to 1.2 million. This measure is down considerably from
  the recent high of 18.0 million in April 2020 but is 489,000 above the February 2020 level. In July, the
  number of persons not in the labor force who currently want a job was 6.5 million, little changed over the
  month but up by 1.5 million since February 2020. In July, the number of employed persons who
  teleworked because of the pandemic fell to 13.2%, down from 14.4% in the prior month. In July, 5.2
  million persons reported that they had been unable to work because their employer closed or lost
  business due to the pandemic. This measure is down from 6.2 million in June. The labor force
  participation rate ticked up 0.1 percentage point to 61.7% in July, and the employment-population ratio
  increased by 0.4 percentage point to 58.4%. Average hourly earnings increased by $0.11 to $30.54 in
  July after increasing $0.10 in June. Average hourly earnings are up 4.0% from July 2020. The average
  work week was unchanged at 34.8 hours in July.

•  The number of claims for unemployment insurance continued to fall. According to the latest weekly
  totals, as of August 14 there were 2,862,000 workers receiving unemployment insurance benefits, down
  from the July 17 total of 3,269,000. The unemployment rate for the week ended August 14 was 2.1%,
  down 0.3 percentage point from the July 17 rate of 2.4%. This is the lowest level for insured
  unemployment since March 14, 2020, when it was 1,770,000. During the week ended August 7,
  Extended Benefits were available in 10 states/territories: Alaska, California, Connecticut, the District of
  Columbia, Illinois, Nevada, New Jersey, New Mexico, New York, and Texas; 46 states reported
  5,004,753 continued weekly claims for Pandemic Unemployment Assistance benefits (5,246,162 in
  July), and 47 states reported 3,793,956 continued claims for Pandemic Emergency Unemployment
  Compensation benefits (4,233,883 in July).

•  FOMC/interest rates: The Federal Open Market Committee did not meet in August. However, at the
  Jackson Hole Economic Policy Symposium, Federal Reserve Chair Jerome Powell reiterated that the
  current spike in inflation is largely the result of transitory factors and that the FOMC will continue to hold
  the current target range for the federal funds rate at its current level. Powell also noted that an eventual
  reduction of monthly asset purchases is likely to begin some time before the end of 2021.

•  GDP/budget: According to the second estimate, the economy accelerated at an annual rate of 6.6% in
  the second quarter of 2021 after advancing 6.3% in the first quarter of 2021. Consumer spending, as
  measured by personal consumption expenditures, increased 11.9% in the second quarter after rising
  11.4% in the prior quarter. The personal consumption price index (prices for consumer goods and
  services) rose 6.5% in the second quarter after climbing 3.8% in the first quarter. Excluding food and
  energy, the price index increased 6.1%. In the second quarter, fixed investment climbed 3.4% following
  a 13.0% increase in the first quarter; residential fixed investment fell 11.5% after increasing 13.3% in the
  first quarter. Exports rose 6.6% in the second quarter after decreasing 2.9% in the first quarter, and
  imports (which are a negative in the calculation of GDP) increased 6.7% in the second quarter (9.3% in
  the first quarter).

•  The Treasury budget deficit was $302.1 billion in July, following the June deficit of $174.2 billion. The
  deficit is 380% larger than the deficit in July 2020. Following the latest increase, the budget deficit
  through the first 10 months of the current fiscal year widened to $2.54 trillion, 10.0% lower than last
  year's deficit over the same period. Compared to last fiscal year, government expenditures have
  increased 4.0%, while receipts have increased 18.0%.

•  Inflation/consumer spending: Prices at the consumer level continued to advance in July. According to
  the latest Personal Income and Outlays report, consumer prices rose 0.4% in July after edging up 0.5%
  in June. Prices have increased 4.2% since July 2020. Excluding food and energy, consumer prices rose
  0.3% in July (0.4% in June) and 3.6% since July 2020. Both personal income and disposable (after-tax)
  personal income increased 1.1% in July. Consumer spending rose 0.3% in July following a 1.1% jump in
  June.

•  The Consumer Price Index climbed 0.5% in July, the same increase as in June. Over the 12 months
  ended in July, the CPI rose 5.4%. Food prices increased 0.7% and new vehicle prices rose 1.7%.
  Energy prices rose 1.6%, with gasoline prices climbing 2.4%. Core prices, excluding food and energy,
  climbed 0.3% in July and have advanced 4.3% since July 2020. Over the last 12 months, energy prices
  have risen 23.8%, food prices have increased 3.4%, and prices for used cars and trucks have climbed
  41.7%.

•  Prices that producers receive for goods and services continued to climb in July, increasing 1.0% for the
  second consecutive month. Producer prices increased 7.8% for the 12 months ended in July, the largest
  yearly gain since November 2010 when 12-month data was first calculated. In July, prices for services
  rose 1.1% and prices for goods moved up 0.6%. Producer prices less foods, energy, and trade services
  advanced 0.9% in July and have risen 6.1% since July 2020, the largest 12-month increase since
  August 2014.

•  Housing: Existing home prices advanced for the second consecutive month after climbing 2.0% in July.
  Over the past 12 months, existing home sales increased 1.5%. The median existing-home price was
  $359,900 in July ($363,300 in June), up 17.8% from July 2020. Total housing inventory at the end of
  July rose 7.3% from June's supply but is down 12.0% from one year ago. Unsold inventory sits at a
  2.6-month supply at the present sales pace, up slightly from the 2.5-month figure recorded in June but
  down from 3.1 months in July 2020. Sales of existing single-family homes rose 2.7% in July following a
  1.4% advance in June. Year over year, sales of existing single-family homes fell 0.8%. The median
  existing single-family home price was $367,000 in July, down from $370,600 in June.

•  New single-family home sales increased for the first time in four consecutive months after advancing
  1.0% in July. Sales of new single-family homes have decreased 27.2% from July 2020. The median
  sales price of new single-family houses sold in July was $390,500 ($361,800 in June). The July average
  sales price was $446,000 ($428,700 in June). The inventory of new single-family homes for sale in July
  represents a supply of 6.2 months at the current sales pace, up slightly from the June estimate of 6.0
  months.

•  Manufacturing: Industrial production increased 0.9% in July after advancing 0.2% the previous month.
  Manufacturing output rose 1.4% after edging down 0.1% in June. About half of the gain in factory output
  was attributable to a jump of 11.2% for motor vehicles and parts, as a number of vehicle manufacturers
  trimmed or canceled their typical July shutdowns. In July, mining increased 1.2% (0.5% in June), while
  utilities slipped 2.1% after advancing 3.1% in June. Total industrial production in July was 6.6% higher
  than its year-earlier level, but it was 0.2% below its pre-pandemic (February 2020) level.

•  New orders for durable goods decreased 0.1% in July after falling 0.8% in June. Transportation drove
  July's decrease, with new orders down 2.2% after advancing 1.4% in June. Excluding transportation,
  new orders increased 0.7%. Excluding defense, new orders fell 1.2%. New orders for nondefense
  capital goods declined 8.0% following a 1.6% increase in June. New orders for defense capital goods
  increased 20.5% in July after decreasing 1.4% in June.

•  Imports and exports: Inflationary pressures at the import level slowed in July. Import prices rose 0.3%
  following a 1.1% advance in June. Import prices rose 10.2% over the 12 months ended in July (11.2%
  for the 12 months ended in June). The monthly advance in import prices was the lowest since November
  2020. Import fuel prices increased 2.9% in July following a 5.5% jump in June. Import fuel prices
  advanced 66.5% for the year ended in July (85.1% for the year ended in June). Nonfuel import prices
  were unchanged in July following a 0.7% advance in June. Export prices increased 1.3% in July after
  climbing 1.2% in June. For the year ended in July, the price index for exports rose 17.2%. Agricultural
  export prices fell 1.7% in July following a 1.5% advance in June. Nonagricultural exports rose 1.6% in
  July after increasing 1.1% in June.

•  The international trade in goods deficit was $86.4 billion in July, down $5.7 billion, or 6.2%, from June. In
  July, exports increased $2.2 billion, or 1.5%, while imports fell $3.4 billion, or 1.4%. For the 12 months
  ended in July, exports have risen 27.6%, while imports have increased 19.6%.

•  The latest information on international trade in goods and services, out August 5, is for June and shows
  that the goods and services trade deficit increased by 6.7% to $75.7 billion. June exports rose 0.6%,
  while imports increased 2.1%. At $284.0 billion, imports of goods and services were the highest on
  record. Year over year, the goods and services deficit increased $135.8 billion, or 46.4%, from June
  2020. Exports increased $150.9 billion, or 14.3%. Imports increased $286.7 billion, or 21.3%.

•  International markets: Inflationary pressures may be slowing at home and around the world. China's
  Consumer Price Index rose 0.3% in July and is up only 1.0% year over year. Prices were flat in the
  United Kingdom in July and have increased 2.0% since July 2020. However, prices in the Eurozone
  picked up in August, climbing 0.4% for the month and 3.0% over the past 12 months. Overall economic
  growth is trending upward as well. Second-quarter GDP for the Eurozone rose 2.0% and is up 13.6%
  year over year. The United Kingdom's GDP advanced 4.8% in the second quarter and 22.2% for the
  year. China's economy continues to rebound, as its GDP rose 7.9% in the second quarter from a year
  ago. For August, the STOXX Europe 600 Index gained about 1.2%; the United Kingdom's FTSE inched
  up 0.3%; Japan's Nikkei 225 Index rose 1.1%; and China's Shanghai Composite Index increased nearly
  2.3%.

•  Consumer confidence: According to the latest report from The Conference Board, consumer
  confidence declined in August for the second consecutive month. The Consumer Confidence Index®
  stands at 113.8, down marginally from 125.1 in July. The Present Situation Index, based on consumers'
  assessment of current business and labor market conditions, fell to 147.3 in August from 157.2 in July.
  The Expectations Index, based on consumers' short-term outlook for income, business, and labor
  market conditions, registered 91.4 in August, down from 103.8 in July. According to the report, concerns
  about the Delta variant, coupled with rising gas and food prices, resulted in a less favorable view of
  current economic conditions.