Daily update
Daily update
- Recent US data has been reported as better than expected. Wide forecast ranges make “expected” a rather imprecise concept. But on both sides of the Atlantic, middle income consumer spending power is better than the official data implies. This is not enough to stop a slowdown, perhaps. It is enough to give resilience to consumers.
- For example, middle income US homeowners face a lower cost of living than consumer price inflation implies. They do not pay the fictional price of owners’ equivalent rent. If they are one of the hundreds of millions of US citizens not buying a used car, their real spending power is further enhanced. Economists are often criticized for removing all the parts of inflation data they do not like—but to understand consumer spending firepower, judicious pruning is necessary.
- Italian preliminary June consumer price data is due, and is expected to show more slowing in the pace of inflation. Charts of recent price inflation in the euro area and the US are a strong visual challenge to the idea of “sticky” inflation.
- At the central bankers’ rave party in Sintra, BoE Chief Economist Pill will be putting down the glow sticks and delivering a speech. Pill speaks authoritatively but not always tactfully on the economy.
