It was an age of reason, it was an age of foolishness
- In was the best of times, it was the worst of times (etcetera). In other words it was the day the Fed came out with its policy decision and GDP slumped. Markets reacted, of course, though economists (who are ever calm and rational) would note that there is much room for revision.
- The weak US GDP seems to owe much to foreign demand (note that US exporters were busy slashing dollar prices in response to the weaker dollar). The Fed seemed balanced (it said it was) about the whole thing, and a September rate hike is by no means ruled out.
- Today we get labour cost data in the form of the employment cost index. This is likely to show additional strength as the tighter labour market for skilled workers comes through. Personal income and consumption data is likely impacted by the weather a little.
- Euro area consumer price inflation is expected to come in at 0% yoy. This is not the end of deflation because the Euro area never had deflation (deflation being a general price decline) but the move onwards and upwards in CPI probably starts here.