U.S. Economy Created 372,000 Jobs in June, Well Above the 250,000 Estimate… The unemployment rate remained steady at 3.6%.
What it means— The labor market is the big caveat in the economy. If unemployment remains low, the Fed has a green light to raise rates in its misguided inflation fight. The latest employment data all but guarantee a 75–basis point hike at the end of the month. Investors looking for a slowdown didn’t get much help from initial jobless claims either, which barely ticked higher, from 231,000 to 235,000. This should make for another volatile month in both the stock and bond markets.
Minutes of June Federal Reserve Meeting Show Consensus on Restrictive Monetary Policy… The Federal Open Market Committee (FOMC) members agreed that it would be appropriate to raise rates by 50 or 75 basis points in July.
What it means— There wasn’t much in the minutes that investors did not know already, which is why the markets didn’t zoom to the moon or flash crash after the release. Fed Chair Powell made clear after the June meeting that the committee considers fighting inflation the top priority, even at the expense of rising unemployment and potentially driving the economy into a recession.
What the minutes did not include and no Fed official has yet addressed in a speech is what would make the FOMC members change their minds. Real GDP growth appears to be circling the drain. Investors appear hopeful that the inflation numbers next week will provide a little relief, which might signal a lower rate hike at the end of the month, if not a full pause in September. That hope is probably misplaced since it seems the debate is over as two Fed officials are now public about a 0.75% rate hike.
Atlanta GDPNow Model Estimates Second-Quarter Real GDP Growth to Be Negative 1.9%… The model lowered its estimate by more than a percentage point after the ISM Manufacturing Index release on July 1, and then raised it a bit on July 7.
What it means— Falling real GDP growth isn’t a surprise. The only question is if second-quarter real GDP growth will be down by more or less than 2.0%. But as noted several times, even though we will end up with two consecutive quarters of negative real GDP growth, it’s hard to call this a recession. Unemployment is still under 4% and nominal GDP growth should be about 6%. Inflation is eating away at our standard of living and many Americans are changing their spending habits, but businesses aren’t shutting down. If unemployment remains below 4.5%, the economic damage could be contained.
Want a Memento When a Loved One Passes? Have His or Her Tattoos Removed and Framed… With more people getting tattoos and the work becoming more intricate, it was just a matter of time before someone saw an opportunity in preserving such art after a person dies. When asked, Save My Ink Forever will send a licensed mortician to excise a designated tattoo from a cadaver, touch up the removed tattoo as much as possible, and then preserve it. The process takes about three months, after which the company delivers the framed tattoo to the family.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do?” ~ John Maynard Keynes
Our plan is “the plan will change.”
What is your plan?
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