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July
19
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Week In Review

China

China’s second quarter growth slowed to 6.2%, the slowest rate in almost 30 years. Retail sales and industrial output edged up in June from May’s levels but remain at lower levels. President Trump stated that he could add more tariffs on imports from China, and talks between China and the U.S. were reported to be stalled.

Our Take

China’s economy is slowing, and it is unclear whether or not the Chinese government and the PBOC will be able to stabilize the growth rate. It does not appear that Chinese economic growth will be receiving a boost from the removal of tariffs anytime soon.


Retail Sales

June retail sales rose 0.4%, doubling expectations. May sales growth was revised higher, from 0.4% to 0.5%.

Our Take

Second quarter retail sales far surpassed expectations. While the Fed is still likely to cut rates later this month, consumer weakness will not be one of the reasons for the cut. In fact, consumer strength in the second quarter should help bolster economic growth in the face of headwinds created by slowing worldwide growth, weak manufacturing and the effects of continuing tariffs.


Municipals

Vermont’s general obligation debt rating was cut by Fitch from AAA to AA+. The downgrade follows Moody’s downgrade from Aaa to Aa1 last fall. Vermont faces an aging population and slowing economic growth.

Our Take

Vermont is taking steps to encourage younger workers to move to the state. The Remote Worker Grant Program allows workers who live in Vermont and work remotely for an out-of-state company to receive financial incentives. In addition, the New Worker Grant Program beginning next year will provide incentives to workers who move to Vermont and work in-state. Adding new workers now will hopefully lead to revenue growth in the future.