Citi(US:C)2025-07-30 02:32Summary of Key Points from the Conference Call Industry Overview - US Economic Outlook: The US economy is experiencing a slowdown in growth, with projections indicating a rebound in Q2 GDP by 2.8% QoQ SAAR after a contraction in Q1. However, underlying growth is expected to slow further in the second half of the year [doc id='75'][doc id='21']. Core Economic Indicators - Labor Market: Job growth is projected at 100k for July, with the unemployment rate expected to rise from 4.1% to 4.2%. The labor market shows signs of weakness, with low hiring rates and an increase in jobless claims indicating downside risks to employment [doc id='28'][doc id='15'][doc id='19']. - Inflation Trends: Core PCE inflation is expected to rise modestly by 2.3% QoQ in Q2, aligning with a slowdown towards the 2% target. Tariffs are anticipated to have a temporary impact on goods prices, with a 0.3% increase in core goods prices likely in June [doc id='76'][doc id='58']. Trade Agreements and Tariffs - Trade Deals: The US has reached a preliminary trade agreement with Japan, setting a tariff rate at 15%, which is lower than the global auto tariff of 25%. A similar approach is expected with other major trading partners [doc id='4'][doc id='5']. - Tariff Implications: Tariffs are set to increase on August 1st for several countries, with expectations that larger trading partners like the EU may avoid significant tariff hikes due to ongoing negotiations [doc id='29']. Housing Market Insights - Housing Affordability: High interest rates and home prices have made housing unaffordable, leading to low sales of new and existing homes. The sector is expected to contract further, with residential construction spending declining [doc id='13'][doc id='66']. - Home Prices: Case Shiller home prices have shown a decline on a month-to-month basis, indicating weak demand relative to supply. This trend is expected to continue, contributing to slowing shelter inflation [doc id='74']. Manufacturing Sector Performance - Manufacturing Activity: The S&P manufacturing PMI fell to 49.5, indicating contraction. Business fixed investment is expected to grow modestly, with durable goods orders showing mixed signals [doc id='23'][doc id='77']. Employment and Wage Trends - Employment Cost Index: The employment cost index is projected to increase by 0.8% QoQ, reflecting easing labor market conditions. Wage growth is expected to slow amidst weakening demand for labor [doc id='64'][doc id='42']. - Labor Force Participation: The labor force participation rate is expected to decline to 62.2%, with a significant portion of this decline attributed to discouraged workers [doc id='47']. Conclusion - The US economy is facing a complex landscape characterized by slowing growth, rising unemployment, and inflationary pressures from tariffs. The housing market remains weak, and manufacturing activity is contracting, indicating potential challenges ahead for economic recovery.