While recent US-related news has focused on the deteriorating situation in Afghanistan, things seem to be on the up in corporate America. US second-quarter corporate profits have surged to an all-time high, rising 9.2% compared to last year’s second quarter. This is an acceleration of the first-quarter’s 5.1% increase compared to Q1 2020. Profits so far in 2021 are up nearly 70% year-on-year. Business spending has now shown double-digit growth for four consecutive quarters, and overall GDP growth expected for 2021 is 7%.
Inflation Update From the Fed Chair
Chair of the US Federal Reserve, Jerome Powell, has said the Fed is likely to begin tapering (slowing the pace of its quantitative easing - or QE) by the end of the year, but interest rate hikes are still a way off. He also reaffirmed that higher inflation is temporary and was mostly confined to certain categories which have risen off a low base due to the impact of lockdowns. Broad-based inflation remains generally moderate and is broadly in-line with the Fed’s 2% target.
The Week That Was…
In the US, July’s borrowing from businesses for capital investments rose 9% compared to last year whilst Congress approved a $3.5TN budget blueprint on Wednesday. It will be put to a vote in late September.
During summer when temperatures exceed 50C, Saudi Arabian residents normally head overseas in search of cooler weather. However this year, they have flocked to venues at home boosting sales resulting a 96.7% rise in spending at restaurants and hotels in June.