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

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

NOTICE POWERED SAY: Neel Kashkari, CEO and chairman of the Federal Reserve Bank of Minneapolis, said on Sunday that the current state of inflation is “very worrying” and “spreading more widely throughout the economy.”

“It’s very worrying. We keep getting inflation readings, new data coming in recently last week and we keep surprising ourselves. It’s higher than we expect,” Kashkari said during an appearance on “Face The Nation” of the CBS. “And it’s not just a few categories. It is spreading more widely throughout the economy and that is why the Federal Reserve is acting so urgently to keep it in check and bring it back down.”

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

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Federal Reserve Bank of Minneapolis CEO and President Neel Kashkari speak during an interview

Minneapolis Federal Reserve Chairman Neel Kashkari warned that the current state of inflation is “very worrying” and continues to “spread wider across the economy” during an appearance on “Face The Nation” CBS 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 most Americans’ real wages, real incomes, are going down,” he said. “They are getting a reduction in real wages because inflation is rising so rapidly. I mean, generally, we think of wage-driven inflation where wages grow rapidly and that leads to higher prices in a self-fulfilling spiral,” which is not happening yet. Wages are now trying to catch up on those high prices. Those high prices are now driven by supply chains and the war in Ukraine, among other factors. So we need to get the economy back into balance before this it really becomes a very high salary. – lead the story of inflation “.

Noting recent economic cost index results, he pointed out that it is a good thing for Americans to earn more, but the Federal Reserve is looking forward to the supply chain adapting to lower prices.

“Only at its base level, inflation is when demand exceeds supply. We know supply is low due to supply chains, due to the war in Ukraine, due to COVID. We were hoping that the The offer would come online more quickly. That didn’t happen it happened, “Kashkari said. “So, we have to balance demand. Now, I hope we get some help on the supply side, but that doesn’t change the fact that the Federal Reserve has its job to do and we are committed to doing it.”

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“We cannot wait for the offer to heal completely. We have to do our part with monetary policy,” he added.

Kashkari argued that the new bill introduced by sens. Chuck Schumer, DNY, and Joe Manchin, DW. Va., Nicknamed the Inflation Reduction Act, “will not have a major impact on inflation” in the coming years, and it will be up to the Federal Reserve to adjust monetary policies to reduce it.

AMERICAN PUBLIC GASLIGHTING: Conservative groups are criticizing President Biden and his administration for trying to “enlighten” Americans by making them believe the country is not in a recession.

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

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

“Based on this 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,” says a post on the White House website.

President Biden speaks 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 “GDP numbers don’t lie”.

After the GDP figure was released, Biden was quick to say the US “is not in a recession”, adding that “it is not a revolt 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 suggest.

“The GDP numbers don’t lie: under the Biden administration, we’re building a broker,” Hild said. “Regardless of how the White House tries to spin it, Biden’s recession is here to last as everyday Americans face higher prices from the grocery store to the gas pump.”

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In an interview he said that the White House’s current calculation that the country is in a recession is based on the fact that there is still no high unemployment.

“My understanding is the [White House] relies on the fact that we haven’t seen a huge number of unemployment yet, but layoffs are on the rise and it may just be a lagging indicator, ”Hild said.

PRODUCTION REPORT: A key report on US manufacturing activity will kick off the new month on Monday morning.

The report, the ISM Manufacturing Purchasing Managers Index for July, will be released at 10am ET. It is expected to drop one point to 52.0, the lowest level since May 2020, and would also mark the fifth month in the past six of declining 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. Observers of inflation will pay close attention to the component of the prices paid.

It is expected to drop to 74.3 for the fourth month, the lowest since December and supporting the forecast for maximum inflation. Looking ahead, the June 2021 reading of 92.1 was a record.

A man who works in a factory

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

At the same time, he notes a 0.2% month-on-month increase in construction spending in June, after a surprise drop of 0.1% the previous month.

NEW EARNINGS WEEK: The second quarter earnings season continues this week with 153 companies in the S&P 500, or around 30% of the benchmark index, expected to report.

That number includes two Dow members: Caterpillar on Tuesday and Amgen on Thursday.

Ticker Safety Last Change 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. 23.45 +0.14 + 0.60%
SBUX STARBUCKS CORP. 84.78 +0.11 + 0.13%
CVS CVS HEALTH CORP. 95.82 +0.36 + 0.38%
THERE CIGNA CORP. 275.25 +2.16 + 0.79%

Other names to watch include video game producer Activision Blizzard on Monday afternoon, Uber and Starbucks on Tuesday, the pillars of managed health care CVS Health on Wednesday, and Cigna on Thursday.

About 280 companies, or just over half of the S&P 500, reported results from April to June and the numbers are above expectations.

WORKING RATIO AT THE TAP: On Friday morning, a key economic report of the week will be released when the Department of Labor is expected to report that the US economy added 250,000 new nonfarm jobs in July. It’s down from a stronger-than-expected gain of 372,000 in June and would mark the weakest employment growth since December 2020.

This news is consistent with other data showing signs of a cooling in the labor market (for example, jobless claims are approaching the last 8-month high).

The unemployment rate is expected to remain stable 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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Looking ahead, the April 2020 unemployment rate of 14.7% surpassed the post-World War II record of 10.8% in November 1982 and was the highest since registration began in 1948.

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

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

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Also, look for hourly earnings to increase 0.3% month-over-month and 4.9% from a year ago. It would be down from 5.1% in June, marking the fourth consecutive month of slowing annual wage growth from a 2-year high of 5.6% in March, and a sign that wage inflation has peaked.

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