Daily update
Daily update
- Federal Reserve Chair Powell makes his semi-annual testimony to Congress today. There is more than a suspicion that the June pause in policy was part of a compromise to appease the Fed’s factions—with the promise of a hike in July the quid pro quo. Powell has tended to be reactive, focusing on current inflation rather than considering where inflation is going.
- Given partisan divisions in the US, the questioning of Powell is likely to be made with an eye to political constituencies (with a focus on the causes of inflation). What economists would love to hear (but almost certainly will not) is an explanation of how Powell thinks inflation will contain profit-led inflation. Retailers’ profit share of retail GDP has risen from an average of a little over 14% in the pre-pandemic years to over 21% at end-2022.
- The UK does an inflation data dump today. Administered power prices help explain why the UK inflation slowdown has been delayed. Spending power may be a little better than inflation headlines suggest, as consumers switch suppliers to get better deals.
- South Korean exports showed a rise for the first twenty days of June. This hints (cautiously) at some normalization of global demand for goods.
