Every Friday, Brian Jacobsen provides perspective on key events and topics of the current week and his thoughts about what the week ahead may hold. Here’s his report for the week of September 11–17, 2021.

The week that was

·         Based on data for August, China’s economic activity is coming off the boil with industrial production throttling back to +5.3% year over year and retail sales rising 2.3% year over year. That was after a surge in activity from March and April of 2020 through March and April of 2021. China’s lockdowns started earlier and lifted earlier than most of the rest of the world. While China’s activity is (hopefully) normalizing, the eurozone’s activity is heating up based on July data showing that industrial production jumped 7.7% year over year. The eurozone went into lockdowns earlier and lifted them later, so there are a lot of cross-country differences in growth rates.



·         Inflation in August cooled to +0.3% month over month. Energy prices rose 2% for the month, but food price inflation slowed. Used car and truck prices fell, as did airfare and hotel/motel prices.

·         U.S. retail sales for August surprised to the upside, rising 0.7% month over month. Online sales rose 5.3%, and grocery store sales rose 1.8%. Auto sales fell 3.6%. Interestingly, gasoline station sales were flat even though gas prices rose 3%, suggesting people may be going out less with the spread of the delta variant of COVID-19. Retail sales growth for July was revised downward to -1.8%.



·         North Korea announced it tested long-range cruise missiles. It then fired ballistic missiles off its east coast. South Korea responded by testing a submarine-launched ballistic missile.

·         There were a number of media reports that House Democrats are going to propose a number of tax code changes to pay for a $3.5 trillion reconciliation bill. Here are a few of the details: raise the corporate income tax rate to 26.5% from 21.0%, increase the minimum tax on U.S. corporate foreign income from 10.5% to 16.5%, increase the top personal income tax rate to 39.6% from 27%, and increase the top capital gains tax rate to 28.8% from 23.8%. The bill also would impose a three-percentage-point surcharge on those making more than $5 million per year.

·         California Governor Gavin Newsom beat a recall effort.

The week to come

·         There are three big monetary policy meetings in the week ahead. The Bank of Japan has a meeting on Tuesday. The Federal Reserve’s policy announcement comes out on Wednesday. The Bank of England releases its policy statement on Thursday.

·         On Monday, we get a reading of U.S. homebuilder sentiment for September. Housing starts data for August comes out on Tuesday. On Wednesday, we get existing-home sales data for August. On Friday, we get new-home sales data for August.

Thanks for reading, stay informed!

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