UAdvisor

A Deeper Dive into July’s Retail Spending

July presented an intriguing shift with its preliminary estimates, indicating a bolstered growth in retail spending.

While this aligns with our internal assessments based on debit and credit card transactions, it's essential to underline the role of temporary government income supports.

Such boosts, though encouraging, may be fleeting.

It's imperative to discern between transient spikes and long-term trends, ensuring our strategies remain sound and forward-looking.

When were the most recent recessions in Canada?

In March 2020, a recession began due to the COVID-19 crisis.

This recession ended in April 2020, making it the shortest, but also the deepest, recession.

The Great Recession, which began at the end of 2008 and continued until May 2009, was another significant recession in Canada.

Real GDP fell roughly 4.3% from its pre-crisis level to its recessionary trough, and unemployment peaked at 8.1% during 2009.

While similar developments unfolded in the U.S., unemployment didn’t peak until October 2009, suggesting the end of a recession doesn’t necessarily signal the end of economic distress.

Semiconductors have emerged as a strategic priority for policymakers around the world.

Access to these chips is seen as crucial for a country's economic competitiveness and security.

In fact, the U.S. recently passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022, joining a wave of countries enacting policies to support domestic semiconductor manufacturing.

The strategic push towards "re-shoring" semiconductor production over the coming years should increase the need for the tools and equipment used in the complex process of chip fabrication.

This creates an opportunity for investors to get in on the ground floor of an industry that is set to see increased demand in the future.

As the world becomes increasingly digitalized, the demand for semiconductors is set to increase.

The technological challenges of increasing processing power by squeezing more transistors onto smaller chips mean that the industry faces higher costs to expand manufacturing capacity.

And these new lines are typically less productive than in the past.

But the combination of growing demand and the increasing cost of incremental production should translate into higher sales volumes and prices for semiconductors over time, which could bolster some chipmakers' profit margins.

This creates an opportunity for investors who can identify the right companies with leading-edge technologies that have already taken some lumps this downturn and serve markets with strong growth prospects over the long term.