High Points for Economic Data Scheduled for July 24 Week

Articles From: Econoday Inc.
Website: Econoday Inc.

None of the economic data on the calendar for the July 24 week will garner nearly as much attention as the FOMC meeting on Tuesday and Wednesday. In spite of widespread anticipation of a 25 basis point increase in the fed funds target range to 5.25-5.50 percent, this is by no means a done deal. While Fed policymakers have been explicit that the fight against too high inflation is not over, they have also been clear that they are watching the economic data closely. Policymakers do acknowledge that headline inflation has cooled meaningfully, but pivotal to the deliberations will be the ill-defined effects from the “long and variable lags” of prior rate hikes.

The FOMC won’t see the June data on their preferred measure of inflation until after the meeting. The report on personal income and spending includes the PCE deflator but won’t be released until 8:30 ET on Friday. However, June data showed the all-items CPI up 3.0 percent year-over-year, a sharp drop from 4.0 percent in May. The core CPI in June rose 4.8 percent compared to 5.3 percent in May. The CPI excluding food, energy, and shelter was up 2.7 percent from June 2022 compared to 3.4 percent year-over-year in May. The CPI report has a special aggregate for all services excluding rent that indicates prices for consumer services are relenting. This year-over-year pace in June slowed to 3.2 from 4.2 percent.

However, the pace of declines in inflation may have accelerated even more than the year-over-year measures suggest. If we look at the half-over-half percent changes in the all-items CPI compared to the Fed’s flexible average inflation target of 2.0 percent, the CPI is at up 1.8 percent in June compared to 3.0 percent in December and the near-term peak of 4.6 percent in June 2022. The core CPI is coming down less quickly, but it is nearing target at 2.5 percent in June 2023 compared to 2.8 percent in December 2022 and near-term peak of 3.2 percent in June 2022. Moreover, the CPI for services excluding rent is at 1.6 percent in June 2023 compared to its near-term peaks of 3.8 percent in December 2022 and 3.5 percent in June 2022.

If the FOMC determines that the inflation data are moving along its expected path and will continue to do so, it may not find another hike necessary at this time. It will not declare the war on inflation as won, especially with uncertainties in the geopolitical climate that would well drive food and energy prices higher again. With inflation expectations well-anchored, the labor market rebalancing, and a resilient US economy likely posting mild expansion in the second quarter 2022, the FOMC may find reason to extend the pause in rate hikes until the September 19-20 meeting. It will be then that the FOMC updates its forecasts and the outlook may be clearer.

Whether the FOMC lifts the fed funds rate at this meeting or not, Chair Jerome Powell’s message at his 14:30 Wednesday press briefing will remain that the job on checking inflation is not done and that the FOMC remains on a meeting-to-meeting basis for monetary policy.

Consumer Price Index year-over-year percent change
CPI all items vs Core CPI vs Services CPI less rent of shelter
Consumer Price Index
Inflation Expectations

Originally Posted July 21, 2023 – High points for economic data scheduled for July 24 week

Leave a Reply

Your email address will not be published. Required fields are marked *

Disclosure: Econoday Inc.

Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such info may change without notice. Econoday does not provide investment advice, and does not represent that any of the information or related analysis is accurate or complete at any time.

© 1998-2022 Econoday, Inc. All Rights Reserved

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Econoday Inc. and is being posted with its permission. The views expressed in this material are solely those of the author and/or Econoday Inc. and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.