People in Hong Kong dining at a dim sum restaurant.China News Service/Getty Images
Disinflationary trends in the US are taking hold partly because of China’s weakening economy, according to Ed Yardeni.
Yardeni said on Thursday that the US could continue to see lower inflation without a recession.
China’s aging demographic profile and weak consumer spending is disinflationary for the US, Yardeni said.
If the US manages to get inflation back down to the Federal Reserve’s long-term target of 2% without triggering a recession, it might have to partly thank China, according to market veteran Ed Yardeni.
Yardeni highlighted in a Thursday note to clients that certain economic forces in China are having a disinflationary impact on the US, and that could ultimately pave the way for a soft landing in the US economy.
“Something is definitely wrong with China’s economy,” Yardeni said, alluding to the fact that months after the Chinese government lifted its strict COVID-19 lockdown measures, its economy hasn’t picked up accordingly.
That has flipped the economic narrative on its head, as many economists had expected at the start of this year that a reopening of China’s economy would help lift the global economy while also putting upside pressure on inflation.
But Chinese exports fell in June and the country’s imports have remained flat since mid-2021, Yardeni highlighted, and that’s leading to lower prices for goods.
“Confirming the weakness in China’s economy is that the country’s PPI fell 5.4% year-over-year through June, while the CPI was unchanged over the same period,” Yardeni said. “China’s PPI inflation rate tends to be a leading indicator for the US PPI for finished goods, which fell 2.8% year-over-year in June.”
China’sweak economy is exporting disinflationary trends to other countries, and that’s a welcome sign for the US Fed, which was likely encouraged by the Wednesday release of the June CPI report, which showed the lowest inflation levels in more than two years. The Producer Price Index for the month released on Thursday was also lower, solidifying the disinflation narrative.
“China’s economy has been weakened by the bursting of its property bubble. Its rapidly aging demographic profile is also weighing on consumer spending as China is becoming the world’s largest nursing home. This is all deflationary for China and disinflationary for the US,” Yardeni explained.
“Bottom line: Inflation can come down in the US without a recession in the US!” Yardeni said.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
