There are lots of things to worry about right now. Inflation, Chinese real estate, the US debt ceiling and skyrocketing energy costs. All these topics are helping September and October live up to their volatile reputations and it appears that the volatility will continue into the near future.

 

I think it's important to note that the North American and the global economy are on solid ground. Fiscal policy settings are conducive to economic growth, corporate earnings are continuing to grow, and corporate capital costs are ridiculously low. It’s hard to imagine the economy not doing well in this environment.

 

To add fuel to our economic recovery fire, we are starting to see supply chain disruptions peak. The chart below shows that delivery times, although still long, are not increasing anymore. This is a very encouraging for an economy that is running very low on inventory. Combine that with the significant decline in daily US COVID-19 cases over the last few weeks (the second chart below) and we have good reason to believe there will be a significant uptick in the economy in the near future.

 

Best of the David L. Fingold Blog (#431), Best of the FinBlog

 

²Trends in Number of COVID-19 Cases and Deaths in the US Reported to CDC, by State/Territory, Centers for Disease Control and Prevention

 

Let's hope these charts are correct and maybe the economy and our lives will get back to some kind of new normal!

 

I've also included a piece from our CIBC economics team entitled "Defending Macklem".

 

If you have any questions, please feel free to contact us anytime.

 

Have a great weekend.

 

Milan