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<ul><li>The Reserve Bank of India is expected to shift its <keyword id="23437409" type="General" weightage="20" keywordseo="monetary-stance" source="keywords">monetary stance</keyword> to 'neutral'.</li><li>As per a report by <keyword id="19895773" type="General" weightage="20" keywordseo="Nuvama" source="keywords" meta.keywordsubtype="org" meta.entityname="Nuvama" meta.hostid="261" meta.entityid="Nuvama">Nuvama</keyword>, <keyword id="19920341" type="General" weightage="20" keywordseo="rate-cuts" source="keywords">rate cuts</keyword> are likely to commence in December.</li><li>The Monetary Policy Committee (MPC) is likely to maintain the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> at 6.5% in its upcoming sitting.</li></ul>The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) will shift its monetary stance to 'neutral' from the current 'withdrawal of accommodation' in credit policy this month, and rate cuts are likely to commence in December, according to a report by Nuvama. As per the report, the Monetary Policy Committee (MPC) is likely to maintain the repo rate at 6.5% in its upcoming sitting. However, several factors, including a slowdown in economic activity and benign <keyword id="20196112" type="General" weightage="20" keywordseo="core-inflation" source="keywords">core inflation</keyword>, are likely to prompt the central bank to soften its stance, the report added. A weaker-than-expected Q1 GDP growth continued slowing of high-frequency indicators in the second quarter, core inflation to near record lows, and fiscal tightening could be the key reasons behind the move, the report added. Additionally, the U.S. Federal Reserve's recent move which indicates ease in the rates will influence RBI’s decision, the report added. The growth rate for the first quarter of financial year 2025 was below the RBI's projection at 7%. The growth rate for the same period stood at 6.7%, signalling weak economic activities. Since then, indicators such as vehicle sales, cement volumes, fuel consumption, GST collections, and rural wages have witnessed sluggishness. The government spending has also been subdued in recent months. Exports have also witnessed a sluggishness after showing recovery earlier this year. "Overall, domestic demand is slowing amid weak exports. At the same time, fiscal policy is tightening while core inflation is near a series-low. Against this evolving growth-inflation mix, a tight monetary stance may not be warranted, particularly when the Fed has also commenced easing," the report added. Going forward the report highlighted that the economy may be reverting to pre-pandemic levels of weak demand, with capital expenditure-to-GDP ratios plateauing. Further supporting its assertion, it stated that while headline inflation remains above target, core inflation has consistently declined over the past 16 months, currently ranging between 3.1% and 3.3%. This reflects weak pricing power in the economy and muted growth in consumption-driven sectors, the report added. Furthermore, it states that the RBI's fiscal policy is contractionary, with tax revenue growth declining into the single digits. This could have an effect on the government's ability to increase capital expenditure in the upcoming quarters. Given the slowing domestic demand, weak exports, and the tightening fiscal stance, the RBI's current monetary stance may no longer be appropriate, according to the report. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/september-auto-sales-automakers-report-a-decline-mahindra-and-mahindra-overtakes-tata-motors/articleshow/113925972.cms">September Auto sales – Automakers report a decline, Mahindra and Mahindra overtakes Tata Motors</a> <a href="https://www.businessinsider.in/business/auto/news/ola-electric-continues-to-lose-market-share-as-bajaj-auto-and-tvs-motor-gain/articleshow/113900252.cms">Ola Electric continues to lose market share as Bajaj Auto and TVS Motor gain</a> <a href="https://www.businessinsider.in/tech/mobile/webstories/upcoming-smartphones-launching-in-india-in-october-2024/slidelist/113804125.cms">Upcoming smartphones launching in India in October 2024</a>

RBI may shift monetary stance to 'Neutral', rate cuts likely by December 2024: Nuvama

<keyword id="20207838" type="General" weightage="20" keywordseo="dsp-mutual-fund" source="keywords">DSP Mutual Fund</keyword>'s September 2024 Netra report credits <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s strong economic recovery to increased fiscal expenditure. The report, which tracks current economic trends and market insights through various charts, emphasizes the need for the private corporate sector and households to play a larger role in sustaining the ongoing growth momentum. Netra also pointed out an unsettling calm in the markets, with the Nifty 50 TRI index maintaining an impressive 53-month streak without a 5% decline and 13 years without a drop greater than 10%. Sahil Kapoor, Head of Products and Market Strategist, DSP Mutual Fund, said, "The calm in the markets, marked by an unnerving lack of volatility, is a double-edged sword. While it provides a sense of stability, it also masks underlying risks that could surface unexpectedly, catching investors off guard. To ensure a sustainable recovery, there is a need for the private sector and households to take the lead, transforming fiscal stimulus into lasting economic growth." However, the report notes a shift in market dynamics, with the momentum factor, which has outperformed since the COVID-19 bottom, beginning to lose its dominance. At the same time, the quality factor, which had underperformed over the last four years, is now seeing a resurgence, potentially indicating a change in market leadership that could favour quality-orientated funds, both active and passive. The report highlights the critical role government spending has played in the recovery, with a focus on capital investments crucial for future growth. However, contributions from the private corporate sector and households have lagged. It also draws attention to a slowdown in India's per capita consumption, approaching lows seen in previous cycles. Given that consumption accounts for around 60% of GDP, it is vital that this sector grows at a rate exceeding GDP growth to stimulate private capital expenditure. India's <keyword id="487578" type="General" weightage="20" keywordseo="tax-collections" source="Orion">tax collections</keyword> have demonstrated robust growth, with gross tax revenue showing a five-year compound annual growth rate (CAGR) of 14 %. This growth, largely driven by <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword>, indicates a rising dependency on capital gains and stock market performance, introducing new vulnerabilities to the economy. The banking and financial services sector (<keyword id="19910880" type="General" weightage="20" keywordseo="bfsi" source="keywords">BFSI</keyword>) has emerged as a key driver of market earnings, recording a 12 % increase in profit after tax (PAT) growth, significantly outpacing the 4.6 % growth observed in non-BFSI Nifty 50 companies. This disparity underscores the sector's importance in India's economic story and highlights promising investment opportunities.

India's strong economic recovery is led by fiscal expenditure: DSP MF

<ul class="summary-list"><li>Israel launched a ground offensive against Hezbollah targets in southern Lebanon on Tuesday.</li><li>Despite the Middle East's significant oil production, crude prices were little changed.</li></ul>Israel launched a <a target="_blank" class="" href="https://www.businessinsider.com/israel-launches-ground-offensive-into-lebanon-destroy-hezbollah-targets-2024-9">ground offensive</a> against Hezbollah targets in southern Lebanon on Tuesday in a marked escalation of tensions in the Middle East — and the energy markets largely shrugged.The indifference is significant because the Middle East is a huge producer of crude oil — pumping one-third of the world's supply — so any geopolitical tension in the region could spark some sort of meaningful price gain.This time, oil prices simply nudged up a little.Global benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/oil-price">Brent crude oil</a> futures were up 0.17% to $71.82 per barrel at 2.14 a.m. ET. Benchmark US <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/oil-price?type=wt">West Texas Intermediate</a> futures were 0.19% higher, at $68.32 per barrel.Notably, the gains followed a 17% decline in Brent and a 16% drop in US WTI futures over the third quarter of the year, when traders were on edge for upside price action amid the developments in the Middle East.The reason isn't rocket science. It's mostly China — the world's largest importer of crude oil."The main cause for the bearish sentiment has been a steady slowing of crude demand growth, especially in China," wrote Henning Gloystein, the practice head of energy, climate, and resources at the Eurasia Group, last month.The world's second-largest economy has been struggling to stage a convincing recovery post-pandemic and is battling multiple challenges, including a property crisis, high youth unemployment, and deflation.Beijing pulled out an <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9">economic stimulus package</a> last week that massively boosted sentiment in China's previously downbeat stock markets, but most analysts are saying the measures are just not enough to turn the situation around on the ground.Even Chinese leader Xi Jinping <a target="_blank" class="" href="https://www.businessinsider.com/xi-jinping-painful-road-ahead-rainy-days-new-stimulus-china-2024-10">acknowledged</a> the extent of China's problems in the country's National Day speech on Monday, saying the path forward wouldn't be smooth.BMI, a research firm, wrote last week that short positions in Brent outnumbered longs for the first time earlier in September."Sentiment in the market is already weak, with a bearish macro narrative weighing heavily to the downside, and investors are currently far more responsive to bearish price drivers than to bullish ones," wrote BMI's analysts.The sentiment over China has been so poor that <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/saudi-arabia-oil-prices-brent-crude-outlook-opec-production-cuts-2024-9">Saudi Arabia</a> has pretty much thrown in the towel on pushing oil higher.The kingdom — which is the world's largest crude exporter and OPEC's de facto leader — is giving up its $100 per barrel price target and ready to increase oil output, the <a target="_blank" class="" href="https://www.ft.com/content/1d186f62-5941-4f9e-aef1-7d93a8a696cd">Financial Times</a> reported last week.This means that Saudi Arabia is looking to corner a larger market share instead of targeting higher profit margins by restricting output.This would be a big shift in policy, since Saudi Arabia has been leading OPEC and the group's allies, including Russia, in maintaining oil supply cuts since late 2022.Despite the downside pressure on oil prices, things could change quickly if geopolitical uncertainty rises further in the Middle East.The US may also provide some support to the market as crude oil inventories hit a <a target="_blank" class="" href="https://www.reuters.com/business/energy/us-crude-gasoline-distillate-inventories-fall-eia-says-2024-09-25/">two-and-a-half year low</a> as of September 20, the latest data available."Yes, it is true that traders are worried about the fact that Chinese demand for oil is not back yet to a level that can make the OPEC stop extending the supply cut process," wrote Naeem Aslam, the CIO at London-based Zaye Capital Markets."However, the fact that the US oil stockpiles are clearing more quickly indicates that the demand for oil in the world's largest economy is trending in the right direction, which is positive for price action," Aslam added.

China's economic issues are so serious that even the oil market doesn't care about Middle East tensions — for now

Bank of America says these 3 higher-risk stocks are well-positioned to take off as rate cuts spur an economic recovery in 2025

India's services sector showed robust expansion in October, per the <keyword id="22267674" type="General" weightage="20" keywordseo="HSBC-India-Services-PMI" source="keywords">HSBC India Services PMI</keyword> (Purchasing Managers' Index), which rose to 58.5 last month, up from September's ten-month low of 57.7. October's figures managed to exceed even the long-run PMI average of 54.1, largely on the back of a strong sales pipeline and elevated demand. Employment, or job creation in this sector accelerated to its fastest growth rate in 26 months. Anticipating solid, sustained demand in the near term, firms added new employees at the most rapid pace in over 2 years. October also saw <keyword id="23834175" type="General" weightage="20" keywordseo="input-costs-rise" source="keywords">input costs rise</keyword> at their fastest pace in 3 months, indicating renewed demand and economic activity in the country. The ISM Services PMI, an indicator of the economic health of the US, also exceeded expectations, reaching 56.0 compared to the forecasted 53.8, suggesting strong growth within the services sector. "During October, the Indian services sector experienced strong expansions in output and consumer demand, as well as job creation, which achieved a 26-month high," said Pranjul Bhandari, Chief India Economist at HSBC. The sector saw increased business activity across multiple fronts, with export sales showing significant growth and companies reporting stronger demand from international markets including Africa, Asia, the Americas, the Middle East, and the UK. However, industry experts remain cautiously optimistic about the sector's prospects. Suman Chowdhury, Chief Economist at Acuité Ratings &amp; Research, noted that while the October recovery is promising, several factors warrant careful monitoring. “The recovery in the PMI indices in October 2024 is promising for the second half of the fiscal after the dip in several high-frequency indicators in September 2024. Industrial and service activity has expectedly received a boost from the anticipated spike in consumption demand in Q3 FY25, driven by the festivities and the marriage season," she said. Chowdhury added that it will be crucial to monitor the sustainability of these PMI indices at these elevated levels, given the reported weakness in urban demand in Q2 as flagged by FMCG companies. She also noted that potential increases in wholesale and core retail inflation, combined with higher input costs and wage pressures, could delay expected interest rate cuts. RBI governor Shaktikanta Das also noted that inflation and CPI figures for October might be elevated, pushing ahead any chances of interest rate cuts in the near future. Acuité Ratings &amp; Research maintains its GDP growth forecast at 7.0% for FY25 while acknowledging the multiple downside risks that will require close observation in the coming months.

India's Services Index jumps to 58.5 in October as employment grows the fastest in 26 months

Following six consecutive days of losses, Indian stock indices surged back into positive territory on Tuesday. Analysts attribute this recovery to a combination of bottom-fishing by investors and a boost in market sentiment driven by the <keyword id="19931558" type="General" weightage="20" keywordseo="Bharatiya-Janata-Party" source="keywords" meta.keywordsubtype="org" meta.entityname="Bharatiya Janata Party" meta.hostid="261" meta.entityid="Bharatiya Janata Party">Bharatiya Janata Party</keyword> (BJP) heading for a third straight term in the Haryana assembly elections. The <keyword id="19896382" type="General" weightage="20" keywordseo="Sensex" source="keywords">Sensex</keyword> closed at 81,634.81 points, gaining 584.81 points, or 0.72 percent, while the <keyword id="19896381" type="General" weightage="20" keywordseo="Nifty" source="keywords">Nifty</keyword> ended at 25,013.15 points, up 217.40 points, or 0.88 percent. All sectoral indices posted gains, with the notable exception of Nifty Metal. Nifty Media, Auto, <keyword id="19933821" type="General" weightage="20" keywordseo="pharma" source="keywords">Pharma</keyword>, and Oil &amp; Gas emerged as top performers for the day. Ajit Mishra, Senior Vice President of Research at Religare Broking Ltd, noted a shift in investor strategy amid the <keyword id="20964705" type="General" weightage="20" keywordseo="market-recovery" source="keywords">market recovery</keyword>. “Traders should consider using this recovery to lighten positions and remain selective for long trades. We continue to favor IT and pharma stocks for their resilience and recommend careful stock selection in other sectors,” Mishra said. The recent string of losses, spanning six sessions, saw the Sensex and Nifty plummet by 4 to 5 percent. Market watchers attributed the dip to a correction phase following a recent bullish run, exacerbated by geopolitical tensions in the Middle East, particularly following a fresh wave of violence between Israel and Iran. <keyword id="19931025" type="General" weightage="20" keywordseo="V-K-Vijayakumar" source="keywords">V K Vijayakumar</keyword>, Chief Investment Strategist at Geojit Financial Services, highlighted a cautious approach for investors navigating the current market landscape. “The best strategy now is to accumulate high-quality, fairly valued bluechips like the leading financials and IT stocks,” Vijayakumar advised. Despite the recent downturn, Indian stocks had previously benefited from the U.S. Federal Reserve’s decision to lower interest rates by a steep 50 basis points, a move that has been supporting capital inflows into emerging markets like India. <keyword id="20015748" type="General" weightage="20" keywordseo="foreign-portfolio-investors" source="keywords">Foreign portfolio investors</keyword> (FPIs), who have been net buyers for four consecutive months, continued to offer some support to the Indian markets through September. Looking ahead, investors are focused on upcoming policy announcements and corporate earnings reports. The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword>’s (RBI) monetary policy outcome on Wednesday is expected to provide additional market cues. The RBI has maintained the repo rate at 6.5 percent for nine consecutive meetings, a policy stance that is closely watched by both domestic and international investors. As the market gears up for the release of India Inc.’s second-quarter earnings, analysts suggest that investor sentiment may further stabilise if results meet or exceed expectations. The BJP's continued strength in Haryana has lent a boost to market confidence, signaling political stability and continuity that many view as favorable for India’s economic trajectory. (With inputs from agencies)

Stocks rebound as BJP's Haryana win spurs optimism in Indian markets

<ul class="summary-list"><li>The Evergrande collapse is not China's 'Lehman moment,' but it does complicate an economic recovery, CFR expert said.</li><li>"Unlike Lehman, Evergrande's insolvency is due to its excessive borrowing and aggressive use of leverage, not over-securitization."</li></ul>China's crumbling property sector, its stock market crash, and its gummed-up economy have drawn some comparisons to the 2008 crash in the US.A few weeks ago, the Chinese <a href="https://www.businessinsider.com/evergrande-ordered-liquidate-china-real-estate-property-crisis-winners-assets-2024-1">property giant Evergrande</a> received a liquidation order from a Hong Kong court, forcing the sale of its assets to <a href="https://www.businessinsider.com/china-evergrande-property-real-estate-crisis-debts-collapse-what-happens-2024-2">repay the company's $300 billion worth of debt.</a>This has spurred on the question: is the Evergrande collapse China's "Lehman moment?"The answer, according to one think tank, is no. But it does pose an obstacle to an economic rebound."Evergrande's bankruptcy is not China's Lehman moment; its downfall is unlikely to immediately trigger a contagion across the entirety of China's financial system," Zongyuan Zoe Liu, a Council of Foreign Relations expert, wrote on Tuesday.Back in 2008, Lehman Brothers, choked by a credit crisis, filed for bankruptcy with $613 billion in debt. The dramatic fall was the climax of the subprime mortgage crash, sending shockwaves through the economy.One famed hedge-fund boss said China's property crash was like the <a href="https://www.businessinsider.com/china-economy-crash-real-estate-collapse-property-market-evergrande-bass-2024-2">Great Financial Crisis from 2008 "on steroids."</a>But what happened with Lehman is not exactly what happened with Evergrande, Liu said."[Lehman] failed because of its aggressive lending, facilitated by the overuse of novel, risky, and opaque financial engineering products and excess risk-taking without sufficient risk management," Liu wrote. "Unlike Lehman, Evergrande's insolvency is due to its excessive borrowing and aggressive use of leverage, not over-securitization."Also, Evergrande's loans made up just 0.2 percent of total financial institution lending, Liu explained. Its corporate debt was 0.04 percent of China's domestic bond market.But that doesn't mean China's economy can <a href="https://www.businessinsider.com/us-china-economy-housing-market-2008-bust-crash-real-estate-2024-2">climb out of its hole any more easily.</a> Evergrande's creditors include homebuyers and companies in the property development supply chain — think construction companies, appliance makers, and home decor firms. So its implosion allows weak investor and consumer confidence to metastasize.And that spells <a href="https://markets.businessinsider.com/news/stocks/china-economy-crash-real-estate-property-stock-market-foreign-investors-2024-2">protracted woes for China's economy</a>."[Evergrande's bankruptcy] brings another negative confidence shock to Chinese households and is likely to put more potential homebuyers on the fence about buying," Liu wrote. "Restoring confidence takes time. Meanwhile, low confidence weakens housing market demand growth, dragging down the broader property sector, which constitutes nearly 30 percent of the Chinese economy."

The Evergrande collapse is not China's 'Lehman moment,' but it does complicate an economic recovery, think tank says

<ul class="summary-list"><li>Polling suggests the economy is important to voters in this year's presidential election.</li><li>The economy is doing well across a wide variety of metrics.</li></ul><a target="_blank" href="https://www.businessinsider.com/trump-harris-swing-states-election-2024-10">Election</a> Day is less than two weeks away, and <a target="_blank" class="" href="https://www.businessinsider.com/what-us-economy-would-look-like-with-trump-biden-presidency-2024-5">the economy</a> is top of mind for many Americans.Twenty-eight percent of likely voters in a <a target="_blank" class="" href="https://www.nytimes.com/interactive/2024/10/13/us/elections/times-siena-poll-likely-electorate-crosstabs.html">poll from The New York Times/Siena College</a> from September 29 to October 6 said the economy was the "most important" issue for their vote, which was the highest share among all issues. A <a target="_blank" href="https://www.pewresearch.org/politics/2024/09/09/issues-and-the-2024-election/">Pew Research Center</a> survey from August 26 to September 2 found that among registered voters, 68% of Kamala Harris supporters and 93% of Donald Trump supporters said the economy is "very important" to their vote.Additionally, an <a target="_blank" class="" href="https://apnorc.org/projects/registered-voters-are-split-on-trusting-harris-or-trump-to-handle-economic-issues/">Associated Press-NORC Center for Public Affairs Research</a> poll conducted in October found registered voters were nearly split on who they thought would do a better job handling different areas of the economy, such as jobs and unemployment.The good news is that the economy is broadly doing pretty well these days."We've seen new highs for the stock market's major averages, falling inflation, the Federal Reserve shifting into easing mode and a job market close to the level associated with full employment," Mark Hamrick, a senior economic analyst at the financial services company Bankrate, said in a recent <a target="_blank" href="https://www.bankrate.com/personal-finance/2024-election-and-the-economy-survey/?tpt=a#top-economic-issue">commentary</a>.While data suggests the US economy is robust, Americans may not agree. The index of <a target="_blank" href="http://www.sca.isr.umich.edu/">current economic conditions</a> from the University of Michigan's Surveys of Consumers has stayed stubbornly low throughout the pandemic recovery.Kurt Reiman, cohead of ElectionWatch at UBS Global Wealth Management, told Business Insider that he doesn't think people feel "euphoric" about the economy. "Voters are reminded daily of the high price of goods and services — whether they're renewing their car or home insurance, or they're going to the grocery store," Reiman said.They're not completely off base. There are a few less-rosy data points out there, like rising long-term unemployment and a historically high level of federal debt.As people get ready to head to polling locations or vote by mail, here's how the US economy has been looking.<h2 id="b1568735-2b7f-4c59-a18d-2eedb9252f8b">The unemployment rate has been under 5% since September 2021</h2>After it rose to around 15% during the height of the early pandemic in April 2020, the unemployment rate has fallen to historically low rates. Even though the unemployment rate ticked up to 4.3% this past July — the highest rate since October 2021 — it has dropped since.While unemployment remains low, the average time unemployed workers were out of a job increased to 22.6 weeks in September. So, those out of work are spending more time looking for their next job.<h2 id="a377c75d-6f92-4f82-9cde-9b55e3445625">Job gains have cooled but remain strong</h2>The economy keeps adding jobs, but the labor market has slowed from its red-hot pandemic recovery.The cooler-but-strong job growth is one indication that the US has continued to avoid a recession — the last one being in 2020.<h2 id="3c79dc9c-b337-418f-8654-44a48ca9035f">There aren't as many job openings per unemployed person as a few years ago</h2>One key measure of the labor market has been turning against job seekers. The number of job openings per unemployed person rose to a record-high ratio in 2022 during the Great Resignation but has declined to 1.1 openings per unemployed person in August and looks more like pre-pandemic levels.It's not impossible to find a job, though; Hamrick said there is "still a reasonable chance that someone who's going to be a job seeker will have a measure of success" depending on their sector and location.<h2 id="b156886f-3057-4ae3-81ab-96249d28aa4c">The inflation rate has slowed dramatically</h2>Inflation has been mostly slowing down after spiking in 2021 and 2022 based on year-over-year increases in the consumer price index.While inflation has slowed, Hamrick said consumers feel constrained by still-high prices. However, Hamrick said, "Americans will continue to claw back some" lost buying power as long as inflation continues to settle down while the job market holds up.Wages have been catching up, and real wages, which are adjusted for inflation, grew 1.5% in September from a year ago.The Federal Reserve has targeted a <a target="_blank" href="https://www.businessinsider.com/us-economy-outlook-data-points-to-soft-landing-no-recession-2024-9">soft landing</a> where inflation comes down without mass layoffs. So far, that seems to be happening. Additionally, the <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-decision-this-week-federal-reserve-powell-inflation-2024-9">Fed cut interest rates in September</a> — the first cut in four years. There's a <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">high chance</a> it will decide to do a smaller cut in November, depending on how the data looks and other factors.<h2 id="3d0817c5-b03c-4e0a-a06d-bb0b9cf4edbf">Real disposable personal income per capita has been looking healthy</h2>Real disposable personal income per capita — a widely used measure of the money people have to spend or save — spiked in the early pandemic due to stimulus checks in 2020 and 2021 and the expanded child tax credits for the 2021 tax year.While real disposable personal income per capita cooled off as inflation accelerated in 2022, it has been gradually rising — and is above where it was before the pandemic and close to the pre-pandemic growth trend.<h2 id="28d1bb36-d16a-4262-837c-72d756c3510e">The S&amp;P 500 in 2024 has hit several all-time highs</h2>During 2024, the S&amp;P 500 has been historically high multiple times. <a target="_blank" href="https://www.marketwatch.com/story/these-6-charts-suggest-investors-should-proceed-with-caution-as-s-p-500-hits-47th-record-high-of-2024-197f7c0a">MarketWatch</a> reported it has hit 47 record highs this year. This index of large publicly traded US companies reflects corporate America doing quite well, and the rising figures may be good for people's retirement savings portfolios.Reiman chalks it up to strong consumer spending, slowing inflation, and lower interest rates leading to higher corporate profits and valuations.<h2 id="940327d3-930a-4b04-ae6e-e7a1a18f7e9a">Confidence among home builders is still low compared to recent years</h2>While the labor market is showing a lot of strength, the housing market is one area of the economy where there are some concerns. More single-family builders are feeling better about housing than a few months ago but are falling short of the confidence seen a couple of years ago. That's based on the NAHB/Wells Fargo Housing Market Index, which tracks the health of the single-family housing market.The index, based on what single-family builders surveyed reported, was a not-too-confident reading of 43 out of 100 in October.<h2 id="5596c1a8-aaad-4fe9-8a2a-12db5abc4c25">Federal public debt as a share of GDP is elevated</h2>Reiman said the Biden administration will be "handing off an economy with higher levels of debt than when taking office." Federal debt is high compared to GDP, even looking beyond the spike of the debt as a share of GDP during the pandemic.While federal debt as a share of GDP was slightly above 100% before the pandemic, recent figures are much higher than in the past. Federal debt was 120% of GDP in the second quarter of this year. In the long run, a high debt-to-GDP ratio may lead to expensive interest costs and future tax hikes or spending cuts.

The economy is a priority for Americans as they head to the polls. Here's what's really going on behind the numbers.

<ul class="summary-list"><li>China's GDP grew 4.6% in the third quarter — its slowest pace of growth in six quarters.</li><li>The People's Bank of China triggered two market support programs after China announced economic data.</li></ul>China on Friday released third-quarter growth data that was its slowest in six quarters, but its stock markets still ended higher on a shot of confidence from its central bank.China's economy grew 4.6% in the third quarter of this year, the country's <a target="_blank" class="" href="https://www.stats.gov.cn/english/PressRelease/202410/t20241018_1957042.html">statistics bureau</a> announced as it touted a "stable growth trend." This was higher than the 4.5% growth forecast that economists polled by Reuters had expected but lower than the 4.7% recorded in the second quarter of the year.<a target="_blank" class="" href="https://stcn.com/article/detail/1356778.html">Sheng Laiyun, the deputy head of China's statistics bureau,</a> told reporters the bureau is confident of hitting the country's official GDP growth target for the year of around 5% based on the trend of economic stabilization and recovery seen in September.China's third-quarter GDP brings growth in the world's second-largest economy to 4.8% through the first three quarters of this year. That puts it at "striking distance" to hit its full-year growth target, wrote Lynn Song, the chief economist for Greater China at <a target="_blank" href="https://think.ing.com/articles/chinas-3q-gdp-beat-should-keep-growth-target-in-striking-distance/">ING.</a>September's retail sales figures were also promising, as they rose 3.2% from a year ago to a four-month high. It was also higher than the 2.5% growth economists polled by Reuters had expected.Meanwhile, industrial production in September grew 5.4% from a year ago — higher than the 4.5% economists had forecast.Even so, some analysts are not convinced the economic data release signals a convincing recovery."We would downplay the importance of better-than-expected key economic indicators in September given that the structural weakness in the property and household sectors remains largely unaddressed," wrote Betty Wang, the lead economist at Oxford Economics, in a note on Friday.In September, China's new home prices fell 5.8% from a year ago — the fastest pace since May 2015, according to <a target="_blank" class="" href="https://www.reuters.com/markets/asia/china-new-home-prices-fall-fastest-pace-since-2015-2024-10-18/">Reuters</a> calculations based on official data."The property market unsurprisingly remains the biggest drag on China's growth," wrote Song, adding that stabilization in the real estate market remains "elusive."<h2 id="be1d62f1-13f0-4ff7-949a-fa2fb1c30260">The People's Bank of China to the rescue</h2>Also on Friday, markets got a shot in the arm as <a target="_blank" class="" href="http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/5481032/index.html">the People's Bank of China</a> pulled the trigger on two funding programs that stand to inject as much as 800 billion Chinese yuan, or $112.6 billion, into its stock market.These programs — a share buyback and a swap facility — were first announced in <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9">late September</a> in a package of measures to support the stock market.PBOC's governor also signaled more interest rate cuts at a <a target="_blank" class="" href="https://www.reuters.com/markets/asia/china-cenbank-chief-warns-against-any-illegal-fund-flows-into-stock-market-2024-10-18/">financial forum on Friday.</a>The central bank's announcements on Friday boosted market sentiment, sending China's benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/index/csi-300">CSI300</a> to close 3.6% higher. Hong Kong's Hang Seng Index also closed 3.6% up."The market is in a bad-news-is-good-news mode, as weak data implies more stimulus ahead," Larry Hu, the head of China economics at Macquarie Group, wrote.China's economy is being dragged by factors including a property crisis, high youth unemployment, and deflation. Especially concerning is <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-weak-domestic-demand-factory-activity-amid-strong-export-2024-7">depressed consumer sentiment</a> as people prefer saving over spending in the current downturn.China has made frequent mentions of support and stimulus measures in recent weeks in an attempt to shore up flagging sentiment after years of negative news and after a massive rally last month ran out of steam."I think they are really trying to underpin growth," Rajiv Biswas, an international economist who's also the author of "<a target="_blank" rel="nofollow sponsored noindex" class="" href="https://affiliate.insider.com?h=2252c62746e53e506c655ce3df395bcea3ecbee5e1b11653f5e13361d3be9338&amp;postID=6711e994e5b54083005dea1d&amp;postSlug=china-economy-3q-gdp-growth-stock-market-stimulus-2024-10&amp;site=bi&amp;u=https%3A%2F%2Fwww.amazon.com%2FAsian-Megatrends-Rajiv-Biswas%2Fdp%2F1137441887">Asian Megatrends</a>," told Business Insider.He added that he expects Beijing to continue to do more to support growth so the economy can enter 2025 on better footing."We expect the policy coordination between monetary and fiscal policy will be stepped up in the following quarters. This should cushion the downside risks in the economy," wrote Oxford Economics' Wang.

China just triggered more stimulus measures, even as it says its economy is showing 'stable growth'

<ul class="summary-list"><li>The Small Business Administration ran out of funding for its disaster loan program on October 15.</li><li>The lapse could slow recovery efforts by small businesses damaged by hurricanes Helene, Milton.</li></ul>Locally owned businesses in places like Asheville still reeling from Hurricane Helene were hit with another setback this week.The Small Business Administration said on October 15 that its disaster loan program had run out of money. While the agency is still accepting applications for aid, it can't make loans until Congress approves more funding. That is likely weeks away, because Congress isn't expected to return until after the November election.The delay is unacceptable, said Kit Cramer, president of the Asheville Chamber of Commerce that represents more than 1,500 businesses. She worries it will slow down the pace of recovery for artists, breweries, and other local shop owners who sustained devastating property damage. Many of them count on the fall tourism season to earn enough money to make it through the less-busy winter months."The vast majority of my membership is small, unique businesses that bring beauty to living here," Cramer said. "That also means they don't have deep pockets. They want to keep paying employees, but it'll be hard. Some already had federal loans from the Covid period that they're paying off."Cramer added that local business owners are also discovering that their insurance policies don't have very comprehensive coverage.The SBA offers business and nonprofit owners low-interest loans up to $2 million for property damage that isn't covered by insurance and economic losses due to the disruption.The SBA said it has received some 37,000 applications from survivors of Hurricane Helene so far. More than 700 loans totaling $48 million have been approved. For Hurricane Milton, the SBA has already received more than 12,000 applications.The SBA's funding lapse comes two weeks after President Joe Biden <a target="_blank" href="https://www.businessinsider.com/fema-helene-milton-relief-funding-congress-disaster-victims-2024-10">warned lawmakers about the rapidly depleting funds</a> and urged Congress to reconvene. FEMA has said it has enough money for immediate disaster relief efforts following Hurricanes Helene and Milton, but the agency might have to stop funding longer-term recovery projects as soon as January without additional money from Congress.House Speaker Mike Johnson, a Republican from Louisiana, said that Congress is tracking the hurricane damage closely and will have a more accurate picture of the financial needs next month. He expects bipartisan support for additional funding when lawmakers return to Washington on November 12.In the meantime, Biden administration officials and business leaders are encouraging people to fill out applications for SBA disaster loans."SBA will continue to support homeowners, renters, businesses and nonprofits in processing their applications to ensure they receive assistance quickly once funds are replenished," Isabel Casillas Guzman, the administrator of the SBA, said in a statement.The SBA has a site in downtown Asheville at the Chamber of Commerce building and is working to set up other stations in the region to help people apply for aid, a spokesperson said.Cramer said the region has never experienced such a catastrophe, which means this is the first time many residents are navigating disaster relief programs. The communities are learning as they go, but also are still focused on getting clean water and helping their neighbors.Cramer lives in the mountain town of Swannanoa, North Carolina, where mudslides have swallowed roads, bridges, and homes, and power remains spotty. She had some roof damage and still doesn't have much running water, but said she is grateful her house wasn't washed away.Are you a business owner, homeowner, or renter affected by the SBA's pause in disaster loans? Contact <a target="_blank" href="mailto:cboudreau@insider.com">cboudreau@insider.com</a>.

The SBA can't help business owners hit by Helene, Milton until Congress comes back post-election

<ul class="summary-list"><li>The direct effects of China's latest stimulus may not kick in until 2025, one researcher says.</li><li>That's because Beijing needs to ramp up spending in addition to monetary stimulus measures.</li></ul>China's massive stimulus package may not have any direct effect until 2025, and according to Tianlei Huang, a researcher for the Peterson Institute for International Economics, Beijing needs to do way more to boost its ailing economy.In a <a target="_blank" class="" href="https://www.piie.com/blogs/realtime-economics/2024/chinas-stimulus-measures-boost-troubled-economy-may-fall-short">note</a> on Tuesday, Huang weighed in on China's latest monetary stimulus package, which includes cutting interest rates, reducing reserve requirements for banks, and injecting around $114 billion in liquidity support.Those measures sent Chinese stocks on a historic rally last week, and yet, they still <a target="_blank" class="" href="https://www.businessinsider.com/china-xi-jinping-stimulus-plan-wall-street-stock-market-economy-2024-9">may not be enough</a> to drive a full recovery of China's economy, Huang said.Lower interest rates, for one, may not entice households and businesses to borrow, or banks to ramp up lending, given China's already-sluggish economic environment. That means some of the stimulus flowing towards banks may end up flowing back towards the government, as banks could sow the funds into government bonds, Huang speculated.Lower rates may also not be enough to nudge China's property market into recovery mode. Many households stopped seeing housing as a "preferred asset class" in the midst of the nation's property crisis, something that will be hard for policymakers to undo, he added."The central bank's interest rate cuts and other policy moves could be ineffective—'pushing on a string'—at a time of weak credit demand, as monetary easing during a downturn does not always work as well as tightening during a boom," Huang wrote. "Moreover, the steps announced so far do not address the deep-rooted problems in China's economy that weigh on its growth, including Beijing's increasing prioritization of national security over economic development, its discrimination against the private sector, and its inadequate fiscal policies."In particular, Beijing needs more fiscal stimulus to go alongside its monetary stimulus measures, Huang said.But <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-stimulus-stock-market-consumer-deflation-outlook-real-estate-2024-9">additional government spending</a> likely isn't coming anytime soon. The nation is poised to "significantly short" on spending in its budget this year, he estimated.Beijing has an option of making a mid-year budget adjustment at the National People's Congress Standing Committee meeting in late October. But, given lags in the legislative process, any additional funds probably won't open up until the of the year, and they probably won't be spent until the spring of the following year, Huang said."The direct effect of such a fiscal stimulus may thus not show up until next year. The indirect effect of such efforts—namely, increased confidence of firms and households, leading them to boost investment and consumption—is likely to be more important," he wrote.Experts have warned that China's economic problems could stick around for the long term given some of the nation's deep-rooted issues, like its <a target="_blank" class="" href="https://www.businessinsider.com/china-population-falling-aging-demographic-economy-slowdown-marriage-birth-rates#:~:text=China's%20population%2C%20which%20is%20about,rate%20surpassed%20the%20birth%20rate.">population decline</a>. At the current pace, Beijing is on track to <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-aging-population-demographics-america-finance-markets-beijing-xi-2023-8">lose half of its population</a> by the end of the century, a 2023 estimate from the Terry Group found, which is likely to significantly crimp economic growth.

Why China's massive stimulus effort might not have any effect until next year

<ul class="summary-list"><li>Hurricane Helene, the dockworkers' strike, and Middle East conflict threaten to upend the US economy.</li><li>Oil prices are up as conflict widens between Israel and Iran.</li></ul>A sudden flurry of global developments has the US economy staring down a troubling trifecta of major crises.Devastation from Hurricane Helene, a dockworkers' strike, and escalating conflict in the Middle East all threaten to scramble supply chains and inflate prices. The confluence of events comes just as the US economy is recovering from a years-long bout of elevated inflation. Coupled with a cooling but still-strong labor market, it looked possible the US would avoid a recession. These events could threaten that.While the effects of Iran's<a target="_blank" href="https://www.businessinsider.com/iran-attacks-israel-with-missiles-after-hezbollah-leader-killing-2024-10"> missile</a> attack on Israel on Tuesday are more speculative, the other two crises happening on American soil could have more predictable impacts. Experts point to direct impacts on the prices of goods like oil, food, and industrial equipment as well as infrastructure damage that would create knock-on effects across industries.For now, it's a waiting game. Many of the effects depend on how long the strike and cleanup last and how quickly the parties responsible for resolving them can act.<h2 id="bb66dc7c-8a7f-46f6-83fe-f763c7971b08">1. Escalation in the Middle East</h2>On Tuesday, the risk of a full-blown war between Iran and Israel escalated when Iran <a target="_blank" class="" href="https://www.businessinsider.com/iran-attacks-israel-with-missiles-after-hezbollah-leader-killing-2024-10">launched a massive ballistic missile</a> attack on its adversary.It came less than a day after Israel ramped up its attacks on Hezbollah with an invasion of southern Lebanon. The heightening conflict also threatens to <a target="_blank" class="" href="https://www.businessinsider.com/us-warns-severe-consequences-for-iran-after-attack-on-israel-2024-10">further entangle the US</a>, which announced it's sending additional fighter jets and thousands of troops to the Middle East to defend Israel and reinforce US troops already in the region.Since Iran's offensive, the price of oil has surged up, raising concerns that a broader conflict could push oil and gas prices higher. When petroleum prices rise, that also impacts the cost of plastics, which could raise prices on a range of goods. Some experts <a target="_blank" class="" href="https://www.theguardian.com/world/2024/oct/02/israel-iranian-oil-refineries-retaliatory-strikes">warn that Israel could target Iranian oil production facilities</a> in potential retaliatory attacks, which could risk further oil price increases."History would say that when there is conflict in the region, the prices of petroleum remain elevated and could continue to rise," Douglas Kent, an executive vice president at the Association for Supply Chain Management, told Business Insider.<h2 id="74292a69-7822-4de1-bb2c-cdde4749d751">2. Dockworkers on strike</h2>Also on Tuesday, dockworkers at all the eastern US ports from Maine to Texas went on strike, threatening <a target="_blank" class="" href="https://www.businessinsider.com/dockworkers-port-strike-ila-impacts-2024-10">a slew of adverse economic impacts</a>, including increased prices on key goods ahead of the holiday shopping season.About 30% of goods imported to and exported from the US pass through the East Coast and Gulf ports, according to a Morgan Stanley analysis, along with about <a target="_blank" class="" href="https://www.businessinsider.com/us-economy-markets-react-israel-iran-escalates-dockworkers-strike-helene-2024-10">half of all US ocean imports</a>. The strike could cause shortages of goods and push consumer prices up, but how much depends entirely on how long the work stoppage lasts, experts say.A few days of snarled supply chains likely wouldn't be a major hit to the economy, while a week or longer could have major impacts. Every day, the work stoppage is costing the economy up to $4.5 billion, according to JPMorgan analysts. If the strike goes for at least two weeks, it may <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/us-port-strike-biggest-stock-market-winners-losers-investing-analysis-2024-10?_gl=1*w94t9f*_ga*MTM5OTQyNzAxOS4xNjc1MDExMTIw*_ga_E21CV80ZCZ*MTcyNzg4MTM4OC4zNTQuMS4xNzI3ODgzOTYyLjQ5LjAuMA..">increase inflation.</a> If it lasts a month, it could <a target="_blank" class="" href="https://www.businessinsider.com/port-strike-impact-costs-us-economy-recession-outlook-shipping-delay-2024-10">cause a recession</a>.And the strike will also have knock-on impacts. For every day the ports are closed, it will take an estimated five days for supply chains to get back to normal, Kent said."We are in a bit of a wait-and-see mode about what the impacts are going to be," Sameera Fazili, former deputy director of the National Economic Council under Biden, told BI. "If the strike goes on for one day or three days, it could take two weeks for some companies to recover, some industries to recover, it could take months for others to fully recover."Some of the imported consumer goods <a target="_blank" href="https://www.businessinsider.com/consumer-products-most-likely-to-be-impacted-by-port-strike-2024-9">most vulnerable to the port closures</a> include perishable foods like fresh fruits and vegetables, wine, beer, liquor, toys, tires, furniture, and raw commodities like salt, sugar, and gypsum. Kent noted that automotive, pharmaceutical, and industrial equipment supply chains are also vulnerable. US meat, dairy, and poultry exports <a target="_blank" class="" href="https://www.businessinsider.com/us-port-strike-hurt-agriculture-livestorck-dairy-farmers-presidential-election-2024-10">could also be disrupted</a>, as well as coal and heavy agricultural equipment.How much the strike impacts prices depends on how much of a cushion companies have built to deal with any bottlenecks. With the memory of pandemic supply chain crises still fresh, many businesses have become better prepared for disruptions by importing goods ahead of schedule in anticipation of the strike or <a target="_blank" class="" href="https://polb.com/port-info/news-and-press/port-of-long-beach-achieves-busiest-month-on-record-09-12-2024/">diverting shipments</a> to West Coast ports."The 2020 disruption presented unforeseen challenges but encouraged many firms to diversify their supply chain and seek backup sourcing: preparation that will likely soften the blow of the dockworker strike," Lauren Saidel-Baker, an economist at ITR Economics, said in a statement.But mitigation efforts, including redirecting shipments, cost money and push prices up. Bottlenecks also encourage carriers to raise their prices, increasing retail and consumer goods prices, Kent said.Fazili said she's confident the dockworkers' union — the International Longshoremen's Association — and the organization representing their employers — the United States Maritime Alliance — can come to a deal to raise wages and improve benefits for workers. With the election looming, Biden administration officials are particularly incentivized to grease the wheels of their negotiations.<h2 id="b5a7373b-dcda-4543-bf11-a8ea2a739cbd">3. Natural disaster strikes the South</h2>All of this comes as Southern states are scrambling to handle the fallout from a superstorm with billions of dollars in damage. Dozens of people have been killed in the flooding, landslides, and high winds wrought by Hurricane Helene, which washed out an untold number of roads, destroyed homes, and devastated entire towns. Rescue and recovery efforts are still underway, with <a target="_blank" class="" href="https://www.wcnc.com/article/weather/hurricane/helene/north-carolina-hurricane-helene-missing-people-finder-victims-survivors/275-d811bbc2-754d-4637-b156-7e4af6e1eadb">hundreds of people still missing</a>, particularly in North Carolina.The storm will likely have far-reaching economic impacts, including the immediate costs of providing emergency services for thousands of residents left homeless or without power or water, and the longer-term costs of rebuilding roads, bridges, and other infrastructure. Helene has likely caused between $15 billion and $26 billion in damage to property on top of about $5 billion to $8 billion in lost economic output, according to Moody's Analytics.In the immediate wake of the storm, a slew of residents across the affected states have <a target="_blank" class="" href="https://www.businessinsider.com/price-gouging-complaints-surge-hurricane-helene-states-fuel-water-hotels-2024-10">reported price gouging</a> by hotels, gas stations, and grocery stores. The hurricane has also disrupted some supply chains, including <a target="_blank" href="https://www.axios.com/2024/10/01/hurricane-helene-iv-fluid-shortage-health-supply-chain">healthcare supplies</a> and high-purity quartz needed <a target="_blank" class="" href="https://www.businessinsider.com/quartz-mine-computer-chips-hurricane-helene-spruce-pine-semiconductor-2024-9">for semiconductor manufacturing</a>."The combination of these events just reemphasizes how important it is for the private sector and companies, which are the ones that control supply chains, to move away from just-in-time and from efficiency only and to recognize that disruptions are on the rise and they ought to be better prepared for that," Fazili said.But the superstorm also threatens much longer-term economic damage, hitting the property insurance industry and the federal flood insurance program. Homeowners in affected areas will likely deal with rising property insurance costs or even lose coverage altogether, experts say."In the short run, the most costly element of the disaster is the damage to homes, property and infrastructure," Adam Kamins, a senior director at Moody's Analytics, told BI. "Longer term, the disaster itself is unlikely to drive people out of the hardest-hit areas, but insurance premiums could rise, denting affordability. This would be especially difficult for Florida, where many private insurers have already left the state."

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