WASHINGTON (MaceNews) – A muted deep summer week ahead with a jobs report that will surprise no one, no matter what it says.
There will have been a lot of hiring in July, an unemployment rate that may improve a little and still many, many unemployed people. The weekly benefit claims for the survey week had popped a little. Regardless, the month’s change isn’t expected to be mind boggling.
GDP was up a lot in the second quarter without any help from the unemployed, enough to reach its pre-pandemic level. Productivity is suddenly hot, even mostly pre-robot. Not enough, though, to make up for the year of gains that the pandemic subtracted from the economy. Yes, inventories are harder to keep topped up with so many off the job but personal consumption is roaring ahead, boosted by the several trillion the government had to borrow to give away. Supply and supply lines are adjusting except maybe for semiconductor chips.
If China decides to one day incorporate Taiwan, there could be a lot fewer chips for the West, a new version of rare earths. Except that challenge is probably even further away than rate hikes. China, some analysts say, was typically clumsy in goading Japan prematurely and signaling its intentions to the world so brazenly. Taiwan won’t be so easy after all, if China waits.
Pardon the digression. Back from geopolitics to what passes for current economic data. The U.S. PCE inflation rate wasn’t that scary after all in the personal income report Friday. Talking heads continued to confuse the rate of change of prices, which may or may not last a while, with higher price levels which mostly are here to stay.
On inflation, jobs, the future, the aftereffects of Federal Reserve Chair Jay Powell’s soothing reassurances layer everything with serenity. As he filled time last Wednesday, with nothing much to add to a picture of somnambulant patience, Powell said again that inflation was either transitory naturally or would be squeezed into transitance by the Fed. (Don’t bother looking that one up. It’s not a word, at least yet.)
A strong jobs recovery is in the works, he said, as millions of unemployed just take a little longer to choose their new occupations, new retirees see if they can live on their nest eggs and the spigot of extra unemployment benefits is gradually turned off. A couple analytical pieces in the past week said the workforce isn’t going to rebound. Let’s ignore them – for now.
Likewise the week just ended clocked in a U.S. 10-year benchmark yield under 1.24%. Nothing to see here. Let’s move along. That yield will bounce up as soon as Powell and colleagues recalibrate monetary policy sometime in the nebulous future, right? The bond market thinks it’s so smart and yet it can’t see the perpetual boom times ahead. Actually the bond market is pretty smart, but let’s not pay any attention – for now.
Some school systems will be opening their doors to in-person classes in as soon as two weeks. School boards all over the place will be masking up the kids and offering remote learning alternatives. Maybe women will be able to get back to the office.
Has the news coverage of the Delta variant been “hyperbolic,” as CNN’s Brian Stelter quoted a White House official saying, exaggerating the dangers of Delta, misleading Americans? Hey, again, it’s deep summer. The newsroom vacation fill-ins have to stretch to get anyone to watch or read the news these days. And while the chryons repeat, “muddled messaging,” and the WSJ editorial page Saturday said, “The CDC’s Delta Variant Panic,” the message itself still seems pretty simple and noncontroversial and it hasn’t changed a bit. Get vaccinated, to potentially save your life and others as well.
The culture wars continue, the inward-looking phenomenon that fogs the windows to the rest of the world. It’s a preoccupation with so many, all trained by social media to express their inner hate and insecurities anonymously on to the rest of us. The consequences sap national will, obscure actual threats and flood the zone with confusion. It’s so hard to worry about it, isn’t it? So don’t – for now.
And if the ferment of the culture wars is distilled into a battle for democracy in election days ahead, as both sides fill their war chests and a shadow presidency emerges, again, let’s put off our concern. Maybe it won’t happen. Maybe complacency isn’t that vitiating. Maybe we should be as comfortable as the sophisticates once were in the Weimar Republic, or Hong Kong.
The long-denied craving for infrastructure spending from the hyperlocal level of government on up will carry the day there as talks go on through the weekend. But elsewhere, so many members of Congress wear paralyzing ankle bracelets, kept on a short ideological leash by their respective dedicated constituencies while everyone else passively watches or doesn’t watch. Members of Congress are seldom on TikTok, where the action is. So who cares?
Therefore the upcoming week of economic data won’t send big ripples in any direction. The trade deficit Thursday will be kind of wide. In fact, isn’t it just as wide as if the trade agreement with China, the years of demonizing China, never happened? We still like to buy things with relatively low price tages, specially with money borrowed at such low rates. The rest of the world will oblige us – again, for now.
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Monday, Aug 2 – 9:45a ET Final July Markit US Mfg index (prelim 63.1)
Monday, Aug 2 – 10a ET ISM July PMI (June 60.6%)
Monday, Aug 2 – 10a US June construction spending (May -0.3%)
Monday, Aug 2 – 3p ET US Treasury’s quarterly borrowing requirements
Tuesday, Aug 3 – 8:55a ET US Redbook weekly retail activity (prvs +16.0%)
Tuesday, Aug 3 – 10a ET US June factory orders (May +1.7%)
Tuesday, Aug 3 – 2p ET Fed Gov Bowman speaks at Fed, ‘Inclusive Recovery’
Wednesday, Aug 3 – 7a ET US MBA wkly mortgage apps (prvs +5.7%)
Wednesday, Aug 3 – 8:15a ET ADP July payrolls est
Wednesday, Aug 3 – 8:30a ET US Tsy Qtrly Refunding announce
Wednesday, Aug 3 – 9:45a ET Markit final US services PMI
Wednesday, Aug 3 – 10a ET ISM July services index (June 59.8)
Wednesday, Aug 3 – 10a ET Fed Vice Ch Clarida speaks, Peterson Inst, text, Q&A
Wednesday, Aug 3 – 10a US Tsy Refunding news conference
Wednesday, Aug 3 – 10:30a ET US EIA weekly oil stocks (prvs -4.1 mln bls)
Thursday, Aug 4 – 7:30a ET US Challenger Layoffs (20,476)
Thursday, Aug 4 – 8:30a ET Initial jobless claims (Prvs wk 400K)
Thursday, Aug 4 – 8:30a ET US trade deficit in goods, svcs (-$71.2 bln)
Thursday, Aug 4 – 10a ET Fed Gov Waller speaks, Amer Enterprise, on dig dollar
Friday, Aug 5 – 8:30a ET July jobs/payrolls (850K)
Friday, Aug 4 – 10a ET – June prelim wholesale inventories (+0.8%)
Friday, July 30 – 1 ET Baker-Hughes oil rig count (prev US -3 to 488)
Friday, Aug 4 – 3p Fed’s June consumer credit (May +$35.3 bln)
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Contact this writer: denny@macenews.com.
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