Political interference

Daily update

Politics can influence which economic data is considered important. Today’s US trade data is not economically significant, but in the trade tariff era it has assumed political importance. US exports should benefit from oil trade, but US consumers’ thirst for imports remains unquenched. This may feed into the tariff debate.
The New York Fed’s inflation expectations survey asks 1,200 ordinary people (not economists) to forecast inflation in a year. Consumers’ inflation expectations are driven by current inflation perceptions, which are driven by the price of high frequency purchases (food and fuel) plus political bias. Expectations matter if consumption or wages change in response; neither is changing. However, politically—with even Republicans blaming US President Trump for inflation—such surveys have impact.
Oil prices barely twitched on news of a Qatari gas tanker being hit by a “projectile” as it tried to exit the Strait of Hormuz on the Omani side. Most shipping is using the Iranian approved route. Few investors assumed a smooth peace process; and with Iranian approved passages seemingly unaffected, the market response is moderate.
There are a few central bank speakers—Bowman of the Federal Reserve follows from Waller’s remarks yesterday (Waller noted the value of forward guidance, but suggested using it more sparingly).