Paying for government

Daily update

Current French Prime Minister Lecornu outlined their policy intentions, if they remain in power. A 4.7% GDP deficit target, no public holidays to be abolished, and no general wealth tax imposed—but tax justice is being talked of. This is likely to be a global trend. The great wealth transfer is underway, and governments with fiscal imbalances are likely to try to mobilize that wealth.
Spanish September preliminary consumer price inflation is due, and the headline rate is “expected” to increase. A relatively small number of economists forecast this number, and the range is quite wide, so missing the consensus expectation has less weight.
US President Trump will meet Democrat legislators ahead of a possible US government shutdown. Markets tend to downplay this political theater, assuming disruption will be reversed when government reopens (if backpay is paid back and jobs return). The economic consequences are likely to be less than the earlier DOGE cuts.
The Dallas Fed manufacturing sentiment poll offers the entertaining comments section, but little of substance. Last week’s personal consumer expenditure deflator showed inflation continuing for things like furniture, televisions, and watches. These are less visible, as low frequency purchases. Grocery prices matter more politically—soaring prices for beef, fresh vegetables, and coffee attract consumers’ attention.