Fed official’s warning, inflation ‘gaslight’ charge, jobs and more: Monday’s 5 things to know

Fed official's warning, inflation 'gaslight' charge, jobs and more: Monday's 5 things to know

Here are five key elements that could impact Monday’s trading.

WARNING SAY FED: The Federal Reserve Bank of Minneapolis CEO and Chairman Neel Kashkari said on Sunday that the current state of inflation is “very concerning” and “spreading more broadly through the economy.”

“It’s very concerning. We continue to get inflation readings, new data coming in as recently as last week, and we continue to be surprised. It’s higher than expected,” Kashkari said during an appearance on CBS’ “Face The Nation.” “And it’s not just a few categories. It’s spreading more broadly through the economy and that’s why the Federal Reserve is acting with such urgency to bring it under control and bring it back down.”

Kashkari pointed out that while wages are rising for many Americans, the costs of goods and services are also rising, meaning workers are experiencing a “reduction in real wages” because inflation is rising so rapidly. He said wage-driven inflation was not happening and the cost of goods was partly due to supply chain disruptions, including caused by the pandemic and now the war in Ukraine.

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Minneapolis Federal Reserve Chairman Neel Kashkari warned that the current state of inflation is “very concerning” and continues to “spread more widely through the economy” during an appearance on “Face The Nation” from CBS on Sunday, July 31, 2022. (John Lamparski/Getty Images/Getty Images)

“For most Americans, their wages are going up, but they’re not going up as fast as inflation, so real wages, real incomes for most Americans are going down,” he said. “They get a real wage cut because inflation is rising so fast. I mean, typically, we think of wage-induced inflation where wages are rising rapidly and causing prices to rise in an auto spiral. -director – it is not yet the case. Wages try now to catch up with these high prices. These high prices are now driven by supply chains and the war in Ukraine, among other factors. And so we need to bring the economy back into balance before it really becomes a very wage-driven inflation story.”

Noting recent economic cost index results, he stressed that it’s a good thing Americans are earning more, but the Federal Reserve can’t wait for the supply chain to adjust to bring prices down. .

“Right at its base level, inflation occurs when demand exceeds supply. We know supply is low because of supply chains, because of the war in Ukraine, because of covid. We were hoping the supply would come online faster. It didn’t happen,” Kashkari said. “So we have to reduce the demand in the balance. Now, hopefully we’ll get help on the supply side, but that doesn’t change the fact that the Federal Reserve has its job to do, and we’re committed to it.”

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“We can’t wait for supply to completely heal. We have to do our part with monetary policy,” he added.

Kashkari argued that the new bill introduced by Sens. Chuck Schumer, DN.Y., and Joe Manchin, DW. Va., dubbed the Inflation Reduction Act “won’t have much of an impact on inflation” over the next few years, and it will be the job of the Federal Reserve to adjust monetary policies for the bring down.

AMERICAN PUBLIC GASLIGHT: Conservative groups are slamming President Biden and his administration for trying to “gaslight” Americans into believing that the country is not in recession.

The country entered a technical recession as the US economy contracted 0.9%, meaning the country recorded negative gross domestic product for a second consecutive quarter.

Ahead of the country’s July 28 advance estimate of GDP, the White House Council of Economic Advisers said that even if the figure is negative, it is still “unlikely” to be an indicator that the country is in recession.

“Based on these data, the decline in GDP in the first quarter of this year – even if followed by another decline in GDP in the second quarter – is unlikely to indicate a recession,” reads an article on the White House website.

President Biden speaking on a podium with two microphones

Conservative groups say President Joe Biden is ‘enlightening’ the American public that the country is not in a recession, with the group telling Americans ‘the GDP numbers don’t lie’.

After the GDP figure was released, Biden was quick to say the United States “is not in a recession,” adding that it’s “not an uprising that the economy is slowing down.”

Will Hild, executive director of Consumers’ Research, told Fox News Digital that the country is in the midst of a recession despite what Biden and his administration are suggesting.

“The GDP numbers don’t lie — under the Biden administration, we’re rebuilding the brokerage,” Hild said. “Regardless of how the White House tries to spin it, the Biden recession is here to stay as everyday Americans face higher prices from groceries to gas pumps.

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He said in an interview that the White House’s current calculation of whether the country is in a recession hinges on the fact that there is not yet high unemployment.

“My understanding is [White House] leans heavily on the fact that we haven’t seen a lot of unemployed yet, but layoffs are increasing, and that may just be a lagging indicator,” Hild said.

MANUFACTURING REPORT: A key report on US manufacturing activity will launch the new month on Monday morning.

The report, the ISM Manufacturing Purchasing Managers’ Index for July, will be released at 10 a.m. ET. It is expected to slip one point to 52.0, the lowest level since May 2020, and would also mark the fifth month in the past six months. decline in manufacturing activity.

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For context, the March 2021 reading of 63.7 marked the fastest pace of expansion in over 37 years. Also for reference, a score of 50 is the dividing line between an expanding and contracting manufacturing sector. Inflation watchers will pay particular attention to the prices paid component.

It should fall for a fourth month to 74.3, the lowest since December and supporting the inflation peak. For perspective, the June 2021 reading of 92.1 was a record high.

A man working in a factory

A key manufacturing report is expected to be released on Monday morning. The ISM Manufacturing Purchasing Managers’ Index for July is expected to slip one point to 52.0, the lowest level since May 2020, and would also mark the fifth month in six years. (Jill Connelly/Bloomberg via Getty Images/Getty Images)

Meanwhile, watch for construction spending to rise 0.2% month-over-month in June, following a surprise 0.1% drop the previous month.

NEW WEEK OF WINNINGS: The second-quarter earnings season continues this week with 153 S&P 500 companies, or about 30% of the benchmark, expected to report.

This number includes two members of the Dow: Caterpillar on Tuesday and Amgen on Thursday.

Teleprinter Security Last To change To change %
CAT CATERPILLAR INC. 198.36 +10.60 +5.65%
AMGN AMGEN INC. 247.47 -2.28 -0.91%
ATVI ACTIVISION BLIZZARD INC. 79.96 +0.45 +0.57%
UBER UBER TECHNOLOGIES INC. 11:45 p.m. +0.14 +0.60%
SBUX STARBUCKS CORP. 84.78 +0.11 +0.13%
SVC CVS HEALTH CORP. 95.82 +0.36 +0.38%
THIS CIGNA CORP. 275.25 +2.16 +0.79%

Other names to watch include video game maker Activision Blizzard on Monday afternoon, Uber and Starbucks on Tuesday, managed healthcare stalwarts CVS Health on Wednesday and Cigna on Thursday.

Some 280 companies, just over half of the S&P 500, reported results from April to June, and the numbers beat expectations.

JOB REPORT ON TAP: On Friday morning, a key economic report of the week will be released as the Labor Department is expected to say the US economy added 250,000 new non-agricultural jobs in July. That’s down from a stronger-than-expected gain of 372,000 in June and would mark the weakest job growth since December 2020.

This news is consistent with other data showing signs of a slowing labor market (for example, unemployment insurance claims are hovering around an 8-month high).

The jobless rate is expected to hold steady at 3.6% for the fifth consecutive month, just slightly above the pre-pandemic level of 3.5% in January and February 2020, which was the lowest since May 1969.

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To put it into perspective, the unemployment rate of 14.7% in April 2020 surpassed the post-World War II record of 10.8% in November 1982 and was the highest since record keeping began in 1948.

The manufacturing sector likely added 15,000 jobs in July, about half of the larger-than-expected increase of 29,000 the previous month and the smallest since April 2021.

Private sector payrolls are expected to rise by 230,000, well below June’s higher-than-expected tally of 381,000 and the lowest since April 2021.

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Additionally, expect hourly earnings to rise 0.3% month-over-month and up 4.9% from a year ago. That would be down from 5.1% in June, marking the fourth consecutive month that annual wage growth has slowed from a 2-year high of 5.6% in March, and a sign that inflation wages peaked.

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