Spin and substance

Daily update

July US producer price data did nothing to change economists’ outlook for the Federal Reserve. Lettuce prices collapsed 72% from the previous month—this follows a health scare and a demand drop, and is unlikely to be touted as an example of disinflation by the administration.
Michigan consumer sentiment data (including inflation expectations) reveals what consumers say they are feeling. The economic value of this data is very low, but it has a political impact and might shape US policies (for instance, toward Iran). Retail sales data offers substance The figures do not adjust for inflation, so fuel prices will distort—but US consumers continue to defy falling real wages and maintain consumption.
The US administration accused more than 40 countries of helping US consumers avoid tariffs when buying imports from China. The accusation focuses on “transshipment”, where China’s goods are routed via other countries. China’s exports to the US are substantially higher than what the US thinks it is importing from China, and this rerouting lowered effective tariffs and helped reduce the inflation impact.
Oil markets have been unimpressed by suggestions of economic sanctions against Iran—sanctions’ effectiveness tends to decay over time, and this is not seen as changing the timeline for reopening the Strait of Hormuz.