Tuesday, August 27, 2024
Year : 2, Issue: 34
A new day dawns for the economy and politics starting Monday.
Last week brought to a close two significant and unprecedented periods in the economic and political worlds. The nomination of Kamala Harris, who until a month ago thought she was running as the No. 2 on the Joe Biden reelection train, starts the final countdown to a volatile and nasty 2024 presidential election, pitting a first-timer against former President Donald Trump.
Now, the focus now will shift from looking back at the trajectory of inflation and the political blame game of what and who caused it to what the road ahead holds. Slower but steady growth with a modest rise in unemployment? A recession? A change in economic policy, whether the populist, tax-cutting style of Trump or the continuation and expansion of Bidenomics, with a fresh coat of paint and some rebranding?
Tuesday brings a report on June home prices from S&P CoreLogic Case Shiller.
The day also features the first of twin reports on how the consumer is faring with the Conference Board’s confidence index for August. This will be the first sampling since the 2024 presidential campaign was upended with the stunning withdrawal of President Joe Biden from the race last month. Both are likely to show consumers still cautious about the economy and concerned about the presidential election.
In between, the second estimate of gross domestic product for the second quarter is released and likely to show no change in the prior estimate of 2.8% annual growth that is hardly a harbinger of recession.
More data on the housing sector comes on Thursday when pending home sales are released. Home buying activity has been volatile of late as mortgage rates have eased from the 7% level of late last year to around 6%-6.5% now, while inventory of homes for sale has improved.
Friday will be a pivotal day for inflation soundings with the personal consumption price expenditures index for July. Although far less well known than the consumer price index, the metric is one the Fed uses to measure inflation and it should show continued progress on bringing inflation back down to the 2% level that is the Fed’s target.
“Overall, we maintain our view of three 25 (basis points) rate cuts in September, November and December,” Nomura Securities wrote in a client note on Friday.
If consumer spending holds up – there will be data on that for July on Friday as part of the PCE report – and the labor market does not weaken further, then the fall could bring a period of relative economic stability.
The same can probably not be said for the political environment, although the state of the economy over the next couple of months and voters’ perception of it could well determine who is the next occupant of the White House.
