Bad week arriving

 

Politico calls the coming avalanche of bad economic news a “Category 5 storm.” Indeed, the Biden administration may want to dig a hole and hide while Biden goes to his summer home in Delaware, given the depressing numbers that will come out of Washington this coming week.

Consumer confidence numbers (which currently stink) hit on Tuesday. A Federal Reserve meeting and decision on interest rates, coupled with a press conference from Fed Chair Jerome Powell, follows up on Wednesday.

The first reading on second quarter economic growth drops on Thursday. And the latest numbers on our vexing run of historically high consumer price inflation close out the monster run of data on Friday. In a note to clients today, analysts at Deutsche Bank suggested the flood of information will “leave you breathless.”

Yikes.

For the White House, hope springs eternal. The administration has been touting the dropping price of a gallon of gas this month as if they’re reading the entrails of a newt and discovering that “prosperity is just around the corner,” as Herbert Hoover claimed right before the bottom dropped out of the economy.

But what are those newt entrails really telling us?

What matters now, both politically and economically, is the direction things are headed. Are we tipping toward a significant and painful recession? Or does the recent decline in gas prices portend more relief to come for strapped consumers who have helped turn this into one of the most hated economies in recent history? We should know a lot more about the answers by this time next week.

More important for the political future are the numbers coming out on Thursday. If the GDP is in negative growth territory, no amount of spin by the administration or Democrats will avoid the conclusion that the nation is officially in a recession.

...

Gas prices need to get to pre-pandemic levels and electricity prices need to fall by a third for people to exhale during the Biden summer.  Both are eating up the take-home pay of many Americans.  Then there are grocery prices that have been driven by inflation and the cost of getting goods to market.

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