PrefBlog

So, the US Inflation number came out:

The Consumer Price Index stayed steady at 2.7 percent compared to the same time last year. On a monthly basis, prices rose 0.2 percent from June. But an important gauge tracking consumer prices that strips out volatile food and energy prices accelerated more rapidly.

“Core” C.P.I., which is closely watched by the central bank, jumped 0.3 percent over the course of the month, or 3.1 percent on a year-over-year basis. That is one of the largest monthly increases so far this year and represents the fastest annual pace in five months. In June, core inflation rose 0.2 percent from the previous month, or 2.9 percent from July 2024.
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Businesses have managed to avoid passing along price increases because of a strategy earlier in the year to stockpile goods that were likely to be subject to Mr. Trump’s levies. Many companies have also sought to absorb the costs themselves in order to avoid driving away customers, some of whom are increasingly under financial strain.

But the July data showed more businesses reaching a tipping point, left with little option but to raise prices following June’s notable uptick. The biggest impact has so far been concentrated in categories such as furniture, appliances and other household wares, as well as recreation goods and footwear.

In July, the broader household furnishings index rose 0.7 percent in June, following a 1 percent increase in June. Compared to the same time last year, those prices are up 2.4 percent. Recreation-related prices rose 0.4 percent. Some of the larger gains in July came in apparel and footwear, categories that are exposed to tariffs on countries around the world, including India, Vietnam and China. Prices on infants and toddlers apparel were up 3.3 percent in July. Footwear was up 1.4 percent.

Speaking of statistics, the new BLS honcho was named:

President Trump announced on Monday that he would nominate E.J. Antoni, an economist at the conservative Heritage Foundation, to lead the Bureau of Labor Statistics. Mr. Trump fired the previous commissioner of the agency after it reported weak job growth.

Dr. Antoni, who would need to be confirmed by the Senate, has previously criticized the bureau and questioned its methods and reports. His nomination underscored Mr. Trump’s attempts to place his own allies in control of a key repository of data about the nation’s hiring, wages and prices.
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“There are better ways to collect, process, and disseminate data — that is the task for the next B.L.S. commissioner, and only consistent delivery of accurate data in a timely manner will rebuild the trust that has been lost over the last several years,” Dr. Antoni posted on X last week.“There are better ways to collect, process, and disseminate data — that is the task for the next B.L.S. commissioner, and only consistent delivery of accurate data in a timely manner will rebuild the trust that has been lost over the last several years,” Dr. Antoni posted on X last week.
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Kevin Hassett, the director of the White House National Economic Council, previously insisted the administration was “absolutely not” trying to shoot the messenger on the heels of a poor jobs report.
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The agency has already seen quite a few departures. It employed about 2,300 people in September 2024, the most recent official data available, but about a third of top positions are currently vacant. And the White House has already weakened outside oversight of the agency’s methods by dissolving an advisory panel of experts in January.

Those changes, along with a diminished budget, will also make it difficult for Dr. Antoni to tackle what economists see as a legitimate problem at the bureau: shrinking survey coverage and declining response rates, which can exacerbate the kinds of large revisions that Mr. Trump cited as a reason for firing Dr. McEntarfer.

In its budget request for 2026, the White House proposed decreasing the bureau’s budget by $56 million.

The new spittle-licker promptly came up with a … surprising … idea:

President Trump’s nominee to lead the Bureau of Labor Statistics is suggesting that the agency suspend its monthly jobs report, an economic staple that is relied upon by the Federal Reserve and U.S. businesses to gauge the health of the economy.

In an interview on Fox News Digital on Monday ahead of his nomination, E.J. Antoni criticized the monthly employment report as flawed and suggested it be replaced with “more accurate, though less timely, quarterly data.”
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“How on earth are businesses supposed to plan — or how is the Fed supposed to conduct monetary policy — when they don’t know how many jobs are being added or lost in our economy? It’s a serious problem that needs to be fixed immediately,” Antoni told Fox News Digital.

He added, “Until it is corrected, the BLS should suspend issuing the monthly job reports but keep publishing the more accurate, though less timely, quarterly data.”
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Responding to the BLS’ employment surveys is voluntary for businesses, while the federal government’s Office of Management and Budget directs the BLS to release “robust” data on basic economic indicators in a “timely” manner. But that’s become more challenging as fewer people and institutions respond to surveys, experts say.

“Response rates have declined for nearly every top-tier government statistical survey over the last decade, a trend that accelerated during the pandemic,” Goldman Sachs economists wrote in an Aug. 11 research note.

He then promptly illustrated the administration’s penchant for thinking about things only after the tough-guy talk:

President Donald Trump’s pick to head the Bureau of Labor Statistics, who previously proposed scrapping monthly jobs reports, is now backing off that idea, according to a report.
Trump tapped EJ Antoni, the chief economist at the conservative Heritage Foundation, for the role after firing the agency’s last commissioner following her release of a poor July jobs report.
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He has since walked back on that proposal, CNN reported. Antoni will continue to issue monthly jobs numbers if confirmed, Heritage Foundation economist Stephen Moore told CNN Tuesday.
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It’s not immediately clear what may have changed his mind. The Independent has reached out to the Heritage Foundation for more information.

Just wait until these clowns find out that doing a good job costs money, spent largely on staff to negate the DOGE firings. Lots and lots of it. They’ll be so surprised that they’ll insist on getting a few Nobel prizes for discovering the concept.

Incidentally, WordPress fans, it turns out that having an unbalanced number of ‘bolding’ formatting statements causes all sorts of peculiar things to happen with the layout. For the last ellipsis in the last blockquote, I had bold-ellipsis-bold instead of bold-ellipsis-unbold and this caused … problems that were not very obvious. Thanks, WordPress!

It’s a red-letter day! A Trump appointee has said something sensible!

Hassett, in subsequent interview on Fox News Sunday, said that if he ran the BLS and had “the biggest downward revision in 50 years, I would have a really, really detailed report explaining why it happened.”

Imagine that! Wanting a thorough understanding of how the revision happened before taking tough-guy action! Will wonders never cease?

Of course, this guy Hassett has a history:

I started doing some digging on Hassett after lunch and discovered that he had coauthored a book called Dow 36,000.

Written in 1999, Dow 36,000 argued that for structural reasons, the stock market was wildly undervalued and was poised to take off like a rocket. Hassett and his coauthor, James K. Glassman, said that 1999 represented a unique moment during which stocks were, as an asset class, undervalued by something like 350 percent:

[The s]ingle most important fact about stocks at the dawn of the twenty-first century: They are cheap. . . . If you are worried about missing the market’s big move upward, you will discover that it is not too late. Stocks are now in the midst of a one-time-only rise to much higher ground—to the neighborhood of 36,000 on the Dow Jones industrial average.

You may remember 1999 as the eve of the dotcom bust. Rather than being poised to make a big move upward, the stock market was at the top of an irrationally exuberant5 bubble.

When Dow 36,000 was published, the Dow Industrial Average was 10,273. That was October. Three months later the bubble popped. By October 2002 the Dow was 7,286.

So, take it as you will. Hassett is a leading contender for Fed chairman, God help us.

Speaking of jobs numbers, Canada’s July number was pretty awful:

Canadian job seekers and young workers are struggling through the dog days of summer even as the labour market shows limited strain from U.S. tariffs.

Statistics Canada on Friday reported 41,000 job losses last month, while economists had expected a slight gain.

The unemployment rate was unchanged at 6.9 per cent in July as StatCan said the number of job seekers held steady month-to-month.

The economy lost 51,000 full-time positions in July, and the bulk of the losses were in the private sector. The information, culture and recreation sector led the drop in employment, followed by construction.
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Average hourly wages meanwhile rose 3.3 per cent on an annual basis in July, up a tick from June.

Darcy Keith reports:

Money markets are pricing in modestly higher odds that the Bank of Canada will cut interest rates at its upcoming policy meetings this year following surprisingly weak Canadian employment data this morning.
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Here’s how implied probabilities of future interest rate moves stood in swaps markets moments after the 830 am ET data, according to LSEG data. The overnight rate now resides at 2.75 per cent. While the bank moves in quarter-point increments, credit market implied rates fluctuate more fluidly and are constantly changing. Columns to the right are percentage probabilities of future rate moves.

Pre-release Money Market

Post-release Money Market

Today’s Survey of Consumer Expectations shows assertions of slowing inflation are not universally accepted:

July Survey: Inflation Expectations Up at Short- and Longer-Term Horizons, Unchanged at Medium-Term

Median inflation expectations increased to 3.1 percent from 3.0 percent at the one-year-ahead horizon and to 2.9 percent from 2.6 percent at the five-year-ahead horizon. Expectations remained steady at 3.0 percent at the three-year-ahead horizon.

Households’ perceptions about their current financial situation compared to a year ago and expectations about their year-ahead financial situation both improved. Smaller shares of respondents reported that their households are worse off than a year ago or are expecting to be worse off a year from now.

The mean expected probability that the U.S. unemployment rate will be higher one year from now dropped 2.3 percentage points (ppt) to 37.4 percent, the lowest reading since January 2025. However, the mean perceived probability of losing one’s job in the next twelve months increased by 0.4 ppt to 14.4 percent.

Perceptions of credit access compared to a year ago deteriorated slightly, with the net share of households reporting that it is easier versus harder to get credit decreasing. Conversely, expectations for future credit availability improved, with the net share of respondents expecting it to be easier versus harder to obtain credit a year from now increasing slightly.

For more details:
Press Release: Inflation Expectations Tick Up; Consumers More Optimistic about Taxes and Their Financial Situations

PerpetualDiscounts now yield 5.74%, equivalent to 7.46% interest at the standard conversion factor of 1.3x. Long corporates now yield 4.89%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now 255bp, unchanged from that reported July 30.