10 Things You Need To Know: July 12, 2022
Key data releases this week include: NFIB Small Business Optimism (Tue), CPI (Wed), Beige Book (Wed), PPI (Thu), retail sales (Fri), industrial production (Fri), and consumer sentiment (Fri).
July 6, 2022
The U.S. ISM Services PMI fell to 55.3 in June from 55.9 in May and 57.1 in April. The June reading, below the peak of 68.4 in November and 60.7 last June, was the lowest level since May 2020’s 45.2. However, the 12-month average was 60.8, reflecting consistently strong growth in the U.S. services sector. The Action Economics Forecast Survey had expected 54.5 for June.
July 8, 2022
The U.S. labor market continued to post solid gains in June with nonfarm payrolls rising 372,000 (+4.3% y/y), according to the establishment survey. However, the increases in both April and May were revised down a total of 78,000. Job gains have averaged 375,000 over the past three months. A 250,000 gain in June had been expected in the Action Economics Forecast Survey.
July 5, 2022
Natural gas, which in Europe costs 700% more than it did at the beginning of 2021, is playing a key role in the deepening economic war between Russia and the West that was triggered by Russia’s invasion of Ukraine. “The world is now thinking about gas as it once thought about oil, and the essential role that gas plays in modern economies and the need for secure and diverse supply have become very visible,” said Kevin Book, managing director at ClearView Energy Partners.
July 8, 2022
China’s economy almost certainly contracted last quarter. Perhaps the most interesting thing we’ll learn from the GDP data on Friday is how comfortable the government is with that fact. One other point to focus on in the data release is the extent of the rebound as the quarter progressed. The government is lining up financing to sustain the recovery in the second half of the year, but it doesn’t amount to the large stimulus that some were expecting.
Financial Times, WSJ
July 7, 2022
James Bullard, president of the Federal Reserve Bank of St. Louis, and Fed Governor Christopher Waller have called for another 75-basis-point interest-rate increase when policymakers meet this month. Bullard says a struggle to stabilize the economy is “straining the Fed’s credibility,” but he expresses confidence inflation will be curbed, noting “labor markets remain robust, and output is expected to continue to expand through 2022.”
The Wall Street Journal
July 10, 2022
The Federal Reserve faces a challenge as it looks to control inflation despite the growing pessimism spreading throughout the economy. Policymakers will look to avoid the “stop-and-go” tactics of the 1970s, when the Fed took a halting approach to raising rates and was ultimately unable to tame inflation or protect growth.
July 11, 2022
We think that the economy is well-placed to handle higher interest rates and anticipate a period of weak economic growth rather than an outright recession: Rate-sensitive spending is a relatively small share of the economy right now, there are no egregious balance sheet vulnerabilities, and the extended period of shortages means that pent-up demand could keep the economy afloat for at least the next 12 months.
July 5, 2022
After building up extra savings amid lockdowns earlier in the pandemic, Americans are now dipping into their cash reserves as inflation remains elevated. The personal savings rate was 5.4% in May, far short of the 34% record set in April 2020 and below the average for the past decade.
July 11, 2022
60,000 home-purchase agreements collapsed in June, equal to 14.9% of homes that went under contract in the month, according to real estate brokerage Redfin. That’s the highest percentage since Redfin began compiling the data in 2017, except for March and April 2020. That’s at the beginning of the covid pandemic when the housing market nearly froze.