The Northern Ireland economy is performing better than expected in the first half of 2024, with revised growth forecasts and strong job market. Economist Lynn Reaser, known for her brilliance and impact on the economic landscape, passes away at 76. Plus, understanding market dynamics and potential buying opportunities for investors in the current economic landscape.
Sources:
https://www.bbc.com/news/articles/cjl640n65l0o
https://www.bbc.com/news/articles/cjl640n65l0o
https://www.sandiegouniontribune.com/2024/07/30/san-diego-economist-lynn-reaser-76/
https://www.cnbc.com/2024/07/30/nvidia-stocks-fall-may-present-a-buying-opportunity-for-some-investors.html
Outline:
(00:00:00) Introduction
(00:00:44) NI economy performing better than expected in first half of 2024
(00:03:54) NI economy performing better than expected in first half of 2024
(00:07:03) San Diego economist Lynn Reaser dies at 76
(00:09:23) Nvidia stock's recent decline may present a buying opportunity for some investors
Simply Economics
Northern Ireland Economy Surpasses Expectations, Remembering Economist Lynn Reaser
The Northern Ireland economy is performing better than expected in the first half of 2024, with revised growth forecasts and strong job market. Economist Lynn Reaser, known for her brilliance and impact on the economic landscape, passes away at 76. Plus, understanding market dynamics and potential buying opportunities for investors in the current economic landscape.Sources:https://www.bbc.com/news/articles/cjl640n65l0ohttps://www.bbc.com/news/articles/cjl640n65l0ohttps://www.sandiegouniontribune.com/2024/07/30/san-diego-economist-lynn-reaser-76/https://www.cnbc.com/2024/07/30/nvidia-stocks-fall-may-present-a-buying-opportunity-for-some-investors.htmlOutline:(00:00:00) Introduction(00:00:44) NI economy performing better than expected in first half of 2024(00:03:54) NI economy performing better than expected in first half of 2024(00:07:03) San Diego economist Lynn Reaser dies at 76(00:09:23) Nvidia stock's recent decline may present a buying opportunity for some investors
- Duration:
- 12m
- Broadcast on:
- 31 Jul 2024
- Audio Format:
- mp3
Good morning and welcome to Simply Economics. It's Wednesday, July 31st. On today's show, the NI economy is performing better than expected in the first half of 2024 and San Diego economist Lynn Reeser passes away at the age of 76. Plus, we'll discuss how Nvidia stock's recent decline may present a buying opportunity for some investors. With this coverage and more up next. I'm David and you're listening to Simply Economics. We start off with some positive economic news out of Northern Ireland. According to a new report from Ulster University economists, the region's economy is performing better than expected. The Ulster University Economic Policy Center has revised its 2024 growth forecast up from 0.8% to 1.4% and expects growth to accelerate to 1.7% in 2025. Here with more details is our economics correspondent. What factors are driving this stronger than anticipated economic performance in Northern Ireland? A few key factors seem to be at play. First, Northern Ireland's services sector, which covers a wide range of activities from retail to business services, grew strongly in the first quarter of 2024. Output expanded by 1.9% over the quarter and was 2.9% higher compared to the same period in 2023. This suggests that consumer services like retail and hospitality may be starting to recover after a challenging period of high inflation. Additionally, Northern Ireland's job market has remained relatively robust in the first half of 2024 with the unemployment rate reaching a new record low of 2% in May and the number of people on company payrolls growing to 808,000 in June, a 2.4% increase year over year. The report also mentions expectations around wage growth outpacing inflation this year. Can you provide some more context around that projection and its potential implications? The Ulster University Economic Policy Center expects average real pay to grow by 2.3% this year, reflecting continued labor market pressures, stronger economic growth, and lower inflation. However, they anticipate pay growth will quickly return to its long-term average of about 0.6% per year, unless there is a marked increase in productivity. This underscores the close correlation between productivity and wage growth and reinforces the need for policymakers in both the new Northern Ireland Executive and the new UK government to focus on measures that boost productivity levels such as capital investment and ongoing development of the skills base. As we look ahead, what are some of the key factors that could impact the trajectory of Northern Ireland's economic recovery and growth? Sustained growth in the dominant services sector will be crucial, particularly in consumer-facing industries like retail and hospitality that were hit hard by the pandemic and subsequent inflationary pressures. Maintaining a strong labor market with low unemployment and steady job creation will also be key to supporting consumer confidence and spending. However, the Ulster University economists emphasize that boosting productivity through targeted investments and skills development will be essential for translating near-term economic momentum into longer-term, sustainable wage growth and prosperity. The policy choices made by the new Northern Ireland Executive and UK government in the coming months could play a significant role in shaping this outlook. Thank you for that comprehensive overview and analysis of the latest economic projections for Northern Ireland. While challenges remain, it's encouraging to see signs of resilience and recovery taking hold. In fact, Northern Ireland's economy is performing better than expected, according to Ulster University economists. The Ulster University Economic Policy Center has revised its 2024 growth forecast up from 0.8% to 1.4% and expects growth to accelerate to 1.7% in 2025. Here with more details as our simply economics correspondent, can you tell us more about what's driving this improved economic outlook for Northern Ireland? The Ulster University economists point to several positive indicators. First, they expect wage growth to outpace inflation this year. With average real pay growing by 3%, this reflects continued pressures in the labor market, stronger economic growth and lower inflation. However, pay growth is expected to return to its long term average of about 0.6% per year unless there's a significant increase in productivity. The economists emphasise the need for policymakers to focus on measures that boost productivity levels, such as capital investment and ongoing development of the skills base. What do the latest official economic data show about the performance of Northern Ireland's economy in the first part of 2024? Rural data published in June suggests Northern Ireland's services sector, which covers a broad range of activities including retail, hospitality and business services, grew strongly in the first quarter of 2024. Output expanded by 1.9% over the quarter and was 2.9% higher compared to the same period in 2023. The figures also hint at a possible start of a recovery in consumer services like retail and hospitality, which had faced a difficult period of high inflation. Additionally, Northern Ireland's job market has remained relatively strong in the first half of 2024, with the unemployment rate reaching a new record low of 2% in May, and the number of people on company payrolls growing to 808,000 in June, a 2.4% increase from June 2023. Given these positive economic indicators, are there any potential headwinds or risks to Northern Ireland's economic outlook moving forward? While the upgraded growth forecasts and recent economic data are encouraging, there are still some potential challenges ahead. The economists note that the expected return to more modest pay growth in the coming years could weigh on consumer spending and overall economic growth if productivity levels don't improve significantly. Additionally, the global economic environment remains uncertain, with factors such as trade tensions, geopolitical risks, and the potential for further supply chain disruptions posing risks to the outlook. Policymakers will need to remain vigilant and adaptable in navigating these potential headwinds. Thank you for that analysis and insight into Northern Ireland's economic outlook. It's encouraging to see the economy performing better than expected, but clearly there is still work to be done to sustain and build on this momentum in the face of ongoing challenges. On a somber note, the economics world has lost a luminary. Lynne Reiser, a nationally renowned economist who had been serving as the chief economist at Point Loma Nazarene University's Fermanian Business and Economic Institute, passed away on Tuesday at the age of 76. Reiser was known for her ability to translate complex economic concepts into real world applications. For more on her legacy, we turn to our correspondent at the Fermanian Institute. What made Reiser such a respected figure in the field of economics? Reiser had an incredible ability to bridge the gap between academia and the real world. She had a long and distinguished career as a chief economist at major banks like Bank of America, where at one point she oversaw more than half a trillion dollars in assets. But what really set her apart was her passion for teaching and mentoring the next generation of economists. At Point Loma Nazarene University, she would arrange private sessions for students with economic heavyweights like Ben Bernanke and Janet Yellen. She brought a level of access and real world experience to a small school in San Diego that was truly remarkable. It sounds like she had a gift for making economics accessible and relevant. What else can you tell us about her approach and her impact on those she worked with? Colleagues and students alike talk about her brilliant mind, but also her incredible humility and down-to-earth nature. She was an important person who didn't act important, and she had a real understanding of the ups and downs of the economy on a personal level as well. In the '90s, she was laid off from a chief economist role when Wells Fargo acquired her bank. But she persevered, taking a job across the country in Florida and continuing to build her expertise and reputation. She brought that resilience and determination to her work with students, showing them by example how to weather the uncertainties of the field and of life. Lynn Reeser's passing is indeed a huge loss for the economics community and all those she taught and mentored. Thank you for helping us remember her remarkable career and legacy today. Shifting gears to the current state of the markets, we're seeing an interesting dynamic where stocks are rising on better than expected earnings but dropping sharply on mediocre results. This was clearly evident on Tuesday with the contrasting reactions to earnings from Stanley Black and Decker and Procter & Gamble. For more, let's bring in our markets correspondent. It stood out to you about how these two stocks traded after reporting. It was a tale of two very different reactions. Shares of Stanley Black and Decker rallied over 7% to a two-year high after the company beat earnings expectations even though it only showed a slight sequential improvement in gross margins. Meanwhile, Procter & Gamble shares fell nearly 6% despite management saying 85% of the business is performing in line with expectations. P&G is known for its consistency and usually delivers but the market is not rewarding that right now. Right, consistency is not being valued by investors at this point in the economic cycle. Can you expand on that and what the market is favoring instead? Absolutely. As CNBC's Jim Kramer put it, "This is not a rational market when it comes to valuing individual stocks but it is rational in terms of where we are in the economic cycle. Companies that have underperformed but are now beating estimates and raising guidance are being rewarded." The market also continues to favor firms that do better in a lower interest rate environment as part of the ongoing rotation. Consistent performers and mega-cap tech names where rates don't really matter are being sold. Speaking of mega-cap tech, Kramer suggested the sell-off in some of those names could be creating buying opportunities. What's his view there? He pointed to Nvidia as an example. Chipmaker's shares are down 13% in the past month, including a 4% drop on Tuesday, even though the stock has more than doubled year to date on soaring demand for its AI chips. Kramer said what we're seeing is a collapse in Nvidia's valuation multiple, potentially setting up a favorable entry point for investors who don't already own the stock but want exposure to the AI boom. Okay, so opportunities emerging in the tech space, any other earnings reports Kramer is watching closely. He's keeping an eye on Starbucks, which reports after the close today. Expectations are low, but Kramer said there could be a path forward for the stock if the new CEO shows progress in resolving the company's boycott issues in China and finding a way to reduce high-coffee prices. If not, the activist firm that recently took a stake in Starbucks could potentially push for leadership changes. So, a lot riding on this report and call. It was definitely an important quarter for the new CEO to lay out his vision. And with that, we wrap up our stories for today. Thanks for listening to Simply Economics. We'll see you back here tomorrow. [Music] [BLANK_AUDIO]