September’s Economic Signals: Momentum, Mixed Trends, and Housing Shifts

As September wraps up, the economic picture is looking a little brighter in some areas — but not without a few head-scratchers. From stronger GDP growth to a housing market pulling in two different directions, here’s what the latest reports are telling us.

GDP Packs More Punch

The economy surprised to the upside in Q2. Growth came in at 3.8%, stronger than first reported. Most of that strength came from services spending, which alone added 0.6 percentage points to the topline.

Even more encouraging: the underlying measure of demand — real final sales to private domestic purchasers — was revised up to 2.9%. It’s not quite keeping pace with headline GDP, but it’s solid momentum heading into the fall.

Durable Goods: Some Spark, Some Caution

Here’s where things get interesting. Business investment was originally thought to be fairly weak in Q2, at just 1.9%. The revision? A much healthier 7.3%. Intellectual property spending, in particular, shot up from 6.4% to 15%.

On the flip side, August durable goods orders told a more mixed story:

• Overall orders jumped 2.9%, thanks mostly to transportation.
• Core capital goods orders rose 0.6% — a good sign businesses are still investing.
• But shipments of those same goods slipped 0.3%, hinting that actual investment might cool in Q3.

The bottom line? Businesses are buying equipment, but the industrial sector still feels stuck in neutral, continuing the flat trend we’ve seen for a few years now.

Housing: A Tale of Two Markets

Existing homes:

• Sales slipped 0.2% in August, keeping the market stagnant.
• Prices ticked up to $422,600, about 2% higher than last year.
• Inventory has grown — up 11.7% year-over-year — but the higher prices are keeping buyers cautious.

New homes:

• A completely different story. Sales surged 20.5% in August to an annualized pace of 800K, the strongest since early 2022.
• Lower mortgage rates and builder incentives gave the market a boost, helping bring inventories down.
• Granted, new home data can swing wildly with revisions, but there’s at least a glimmer of momentum here.

What’s Next

It’s a lighter week for economic releases. Pending home sales and the JOLTS report are on deck, and both are expected to keep with recent trends rather than shake things up.

All in all, the economy seems to have a bit more wind at its back than many expected, even if manufacturing is dragging its feet and housing remains a split story.