WASHINGTON (MaceNews) –A week ahead with a soaring GDP, strong income, maybe some more records for stocks, all in all a super summer under way with only a few negatives, like a pending wave of evictions, a raging virus, accelerating inflation and deep and sometimes paralyzing ideological fissures.
For the time being, no one is accusing the U.S. government of manipulating the economic statistics, not always the case. So when the first look at second-quarter GDP is issued Thursday, even if it should hit those expected stratospheric heights, it will be accepted, no questions asked. Estimates range from an annual rate of 7% to perhaps as much as 9%, stronger than even China’s 7.9%.
Such spectacular growth and a seemingly bottomless cornucopia of government pandemic relief might be expected to rev up the optimism indexes to similar uncharted levels. But no, the weekend ABC-Ipsos poll shows about a 20-point drop in optimism since May. So now a 55% majority say they are pessimistic about the direction of the country. The decline was across the board.
President Joe Biden’s approval ratings have also suffered, even for his handling of the pandemic.
The University of Michigan’s final July consumer sentiment survey is published Friday. The mid-month figure was 80.8 and it will be interesting to see if the pessimism is further denting the trend. The preliminary 80.8 was an already sharp and unexpected decline from June. The survey cited fears of accelerating inflation as the main reason.
Even a cornucopia has its limits, it seems. Part of the trillions in pandemic relief was $47 billion in rent relief. There are an estimated 11 million or so behind in their rent and the end of this week means the end of the federal moratorium on evictions. States distribute the federal money and some have done a very poor job. Others have been mediocre at best and most of the money has not been distributed to those who need it. Maybe it’s the 12-page application, or hesitancy on the part of landlords to participate or poor design of the program.
When 40 states which don’t have their own moratorium extensions in place start allowing evictions at the end of the month, there will doubtless begin an onslaught of news stories of families being put on the street, not great background music for a nation already getting more pessimistic.
The topic may come up in Federal Reserve Chair Jay Powell’s news conference Wednesday afternoon, where the focus will be on the extent to which FOMC participants considered tapering of asset purchases. Mace News’ Steve Beckner has 3,000 well chosen words looking ahead at the two-day meeting elsewhere on this Mace News site.
The June report for new home sales is Monday and just like in last week’s housing starts report, the key figure will be completions which in May were less than half those of a year earlier. In the June housing starts report completions of single-family homes were 6.1% below a year earlier, one of the reasons for the continuing shortfall of supply in the pipeline of new and existing homes.
The existing home sales report was also last week and as reported at the time, there was an ominous note sounded by the National Association of Realtors Chief Economist Lawrence Yun. He said it was a “puzzle” for him why the monthly Consumer Price Index is not reflecting the increase in house prices, or as the BLS terms it, owner equivalent rents, and in direct rents that the NAR sees. It’s not even close. So far the BLS has not responded to our request for an explanation.
Those ideological fissures, which have the perverse effect of blocking a lot of vaccinations, were on display Saturday night as Donald Trump stoked the grievances of a very large rally audience in Arizona. The nation, he said, is being destroyed and unless what he says was a rigged election is remedied, it will be down for the count in a couple of years.
A new book takes a rosy view of the future of misinformation warfare, saying even a practiced manipulator can only fuel belief in falsehoods for so long. Jonathan Rauch writes in his “The Constitution of Knowledge” that fact-based information ultimately wins out. The downside, it can take 20 years.
All of the week’s data points are listed below:
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Monday, July 26 – 12:01a ET US NABE Business Conditions Index
Monday, July 26 – 10a ET US June new-home sales (Expected +4.0%; May 769K)
Monday, July 26 – 10:30a ET July Dallas Fed Mfg Index (June 29.4)
Monday, July 26 – 2p ET US NABE Business Conditions Survey webinar
Tuesday, July 27 – 8:30a ET June durable goods orders (May +2.3%)
Tuesday,July 27 – 8:55a ET US Redbook weekly retail activity (prvs 15.0%)
Tuesday, July 27 – 9a ET Case-Shiller May home price index (expected +16.4% Y/Y; Apr +14.6%)
Tuesday, July 27 – 9a ET US FHFA May House Price Index (Apr +1.8%)
Tuesday, July 27- 10a ET June Conf Brd Consumer Confidence Index, final (124 expected; prelim 127.3)
Tuesday,July 27 – 10a ET Richmond Fed July Mfg index (June 22)
Wednesday, July 28 – 7a ET US MBA wkly mortgage apps (prvs -4.0%)
Wednesday, July 28 – 8:30a ET US June advance trade in goods (May -$88.1 bln)
Wednesday, July 28 – 2p ET FOMC policy statement; 2:30p FOMC news conf
Wednesday, July 28 – 10:30a ET US EIA weekly oil stocks (prvs )
Thursday, July 29 – 8:30a ET Initial jobless claims (Prvs wk 419K)
Thursday, July 29 – 8:30a ET Adv 2Q GDP (Range expected +7% to +9.1%; 1Q 6.4%)
Thursday, July 29 – 10a ET US NAR June pending home sales (May +8.0%)
Friday, July 30 – 8:30a ET US June personal income (May -2.0%)
Friday, July 30 – 8:30a ET US Jan-Mar employment cost index (4Q +2.5%)
Friday, July 30 – 8::30a ET Fed’s Brainard speaks, Aspen Group
Friday, July 30 – 9a ET St Louis Fed’s Bullard speaks to EEFC
Friday, July 30 – 9:45a ET July Chi PMI (June 66.1)
Friday, July 30 – 10a UMich final consumer sentiment (prelim 80.8)
Friday, July 30 – 1p ET Baker-Hughes rig count (prvs US +7 to 491, +240 Y/Y)
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Contact this writer: denny@macenews.com.
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