As we wait for Powell’s Jackson Hole speech, let’s take a look at what some of the nowcast indicators show for growth and inflation.<\/p>\n
Starting with growth, we have the Atlanta Fed GDPNow tracket at 2.3% for Q3.<\/p>\n
Moving on to inflation, and looking at the Cleveland Fed CPI nowcast, Core CPI YY is currently tracking at 3.05%, with Core PCE sitting at 2.96% (let’s just call it 3.0%).<\/p>\n
Now I’m no rocket scientist, but it’s really tough to argue for cuts (don’t even get me started on recession) when growth is above 2.0% and Core inflation is sitting at or just above 3.0%.<\/p>\n
I can already feel my ears burning as some reading this might be shouting out ‘It’s the labour market!’. I totally agree that the main focus for cuts is solely focused on the labour market. With those ugly revisions we got that makes sense.<\/p>\n
However, among labour market data, apart from the prior month’s revisions, other more timely indicators are not showing stress. Looking at the 1Y change in claims data, we can see that a rise of between 20%-30% per year usually suggest a recession is on the way or in most cases already happening.<\/p>\n
Currently, this is sitting at 3.1%. So, some labour data is looking scary, while others like this and the Unemployment Rate is still looking fine.<\/p>\n
The bottom-line is that the current aggregate of the data makes for a difficult argument for aggressive cuts from the Fed.<\/p>\n
The US can’t have ‘the best economy in the world’, and require 200 basis points of cuts at the same time.<\/p>\n","protected":false},"excerpt":{"rendered":"As we wait for Powell’s Jackson Hole speech, let’s take a look at what some of the nowcast…\n","protected":false},"author":2,"featured_media":363660,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,16,15],"class_list":{"0":"post-363659","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115070368839941420","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/363659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=363659"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/363659\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/363660"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=363659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=363659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=363659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}