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Construction boom

New construction of US homes rose sharply in July. Housing starts rose 23% from June to an annual pace of nearly 1.5 million, driven by the lows of interest rates and strong buyer demand. Construction activity bottomed out in April due to Covid-19 lockdowns and greater uncertainty, but has largely returned to pre-demented levels since then – July’s pace was above the 2019 average for launches. This is a good sign for relaxation. Employment in construction and consumer spending on furniture, appliances and home improvement have outperformed other sectors, helping to boost GDP. “Although housing construction has a small share of GDP, its effects on the overall economy are far-reaching,” said Berenberg Capital Markets economist Roiana Reid.

WHAT YOU NEED TO WATCH TODAY

The US Quarterly Services Survey for the second quarter is at 10 p.m. ET.

The Federal Reserve publishes the minutes of its meeting from July 28-29 at 2 p.m. (CET). Read our preview here.

Thomas Barkin, President of the Richmond Fed speaks at a National Economists Club webinar at 3 p.m. ET.

TOP STORIES

Deal or no deal

Treasury Secretary Steven Mnuchin said Tuesday that talks between Republicans and Democrats over another round of stalled Stimulus fundingalthough the bipartisan appetite for a deal remains high. Meanwhile, $ 600 weekly unemployment benefit ran out in late July, creating a potential headwind to the recovery. The results so far appear to be muted, at least at national level. Credit card spending, tracked by JP Morgan Chase, surged to a new post-Covid high in the week leading up to August 14, banking economists said, and other real-time indicators suggest activity may have declined but not declined. One sign of consumer spending, the number of seats in restaurants, hit a post-pandemic high in the seven-day period ending Monday.

And the latest mobility data from Google, which records location data on cell phones and shows visits to restaurants, retail stores, and other resorts, is roughly the same as it was in July.

Of course, this does not mean that people who have lost the extended benefits can go back to work. A measure of the vitality of the labor market, the number of job vacancies, posted its first decline since April, according to Employment Website Indeed.

Some financial relief could be on the way to the unemployed. Several states have received federal approval to make an additional payout $ 300 per week in benefitsHowever, some said it would be a few weeks before they could deliver the money to the workers. Arizona, Iowa, Louisiana, New Mexico, Colorado, Missouri, and Utah were the first states to get approval for Federal Emergency Management Agency funds to send out improved unemployment benefits. President Trump signed an executive order earlier this month asking federal agencies to provide the additional $ 300 per week, Sarah Chaney reports.

Higher and higher

A rally in technology stocks helped that S&P 500 to new highs Tuesday. After more than a week of flirting with record highs, the index hit its first intraday and closing high since February. Shares got an early boost after the Commerce Department said housing starts skyrocketed. The indices were also boosted by the ongoing rally in technology stocks. Aside from the milestone for the S&P index, it was a relatively quiet session. Although recent economic data has been largely encouraging, traders have been held back by uncertainty about a new economic relief package in Congress, new tensions between the US and China, and some unease about how high stock prices are relative to earnings, Anna Isaac reports and Sam Goldfarb.

So is it a bubble? Streetwise columnist James Mackintosh says no. Investors don’t irrationally buy anything just because money is cheap: they are buy rationally the things that benefit during a pandemic.

ups and downs

Walmart’s quarterly sales rose as the retail company continued to leverage its scale, e-commerce supply chain, and grocery store to attract customers Purchase of groceries and housewares during the coronavirus pandemic. The world’s largest retailer said sales were boosted by government stimulus spending, which increased demand for general goods such as electronics, patio furniture, sporting goods, and even apparel, a category with weak sales at the start of the pandemic. As government funding decreased, sales returned to more normal levels in July, reports Sarah Nassauer.

Another retail winner during the pandemic:: Home Depot. The home improvement retailer posted its strongest quarterly sales growth in nearly 20 years on Tuesday as interest in household projects increased, Matt Grossman reports.

Boeing is planning further job cuts in response to a pandemic-induced drop in jetliner demand It is expected to take at least three years. The aerospace giant said in a memo to its staff that it was adding a second round Takeover bidsThis would further reduce the workforce by an unspecified figure, which goes beyond the 19,000 cut announced in July. The company increased its April goal of reducing its total workforce by around 10%, Doug Cameron reports.

Video: College Towns prepares for economic upheaval

The coronavirus has driven nearly half of U.S. colleges and universities to some degree of distance learning, a change that is sending shock waves through the economies of small university cities. WSJ’s Carlos Waters explains.

WHAT WE’LL READ

China’s real estate market could be built on shaky ground. “We conclude that the sector is very vulnerable to a prolonged growth shock such as Covid-19 could represent. Our base calibration uses input-output tables and takes into account the very large footprint of housing and real estate in sectors Adjusting for a decline in residential construction will slightly reduce cumulative 5 to 10% of production levels (over a period of years), “said Kenneth Rogoff of Harvard and Yuanchen Yang of Tsinghua University write in a working paper.

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