Resilient US economy defies doomsters again

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news the world's largest economy keeps on throwing up unexpected positive surprises.</p><p>First up today, there was a very <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/august/" target="_blank"><strong>strong August services ISM PMI</strong></a> out for the giant American economy. It is a widely-watched and influential metric and it rose unexpectedly with its strongest growth in six months. Faster increases were seen in business activity, and both new orders and employment especially. It's a confirmation of the resilience we have been pointing out recently, and might even change the mind of some Fed waverers. Markets think so, and equities recoiled somewhat on the prospects of a rate hike again.</p><p>A widely-watched <a href="https://www.atlantafed.org/-/media/documents/cqer/researchcq/gdpnow/realgdptrackingslides.pdf" target="_blank"><strong>GDP-Now tracker</strong></a> is suggesting that most analysts are significantly underestimating American economic growth for Q3-2023.</p><p>Unnoticed, <a href="https://www.investors.com/news/economy/u-s-economic-optimism-rebounds-but-theres-a-red-flag/" target="_blank"><strong>small business optimism rose</strong></a> sharply too in its independent August survey.</p><p>Meanwhile, the yo-yoing of <a href="https://www.mba.org/news-and-research/newsroom/news/2023/09/06/mortgage-applications-decrease-in-latest-mba-weekly-survey"><strong>mortgage application levels</strong></a> continued last week with them falling -2.9% from the prior week after an earlier lift. But the outsized fall took them down to their lowest level since the end of 1996 - and that was despite mortgage interest rates easing slightly in the same period.</p><p>The <a href="https://www.redbookresearch.com