Markets with Megan

As the Federal Open Market Committee (FOMC) prepares to unveil its latest decisions, our latest podcast episode dives deep into the economic data influencing these critical choices. We analyze housing, job market trends, and consumer confidence data to provide an outlook on potential Fed policy shifts. Join us as we unravel the economic puzzles ahead and consider the implications of a potential rate adjustment in September.

One of the central topics in our discussion is the housing market slowdown. Housing prices have been on a year-over-year growth trajectory of 6.8%, a deceleration from the previous month's 7.25%. This decline suggests a potential alignment with the Fed's shelter component goals. The cooling housing market, alongside the latest Job Openings and Labor Turnover Survey (JOLTS) report indicating a slight drop in job openings from 8.2 million to 8.1 million, presents a complex scenario for the Fed. Consumer confidence has shown a notable rise, particularly in future expectations, painting a hopeful picture for continued consumer spending.

The podcast also delves into the implications of these economic indicators for the upcoming FOMC meeting. With the housing market showing signs of deceleration, the labor market remaining tight, and consumer confidence on the rise, the Fed faces a challenging task. The possibility of a September rate cut is explored, with experts weighing in on the likelihood of such a move. Tune in to stay informed and gain valuable insights into the intersection of economic data and monetary policy.

Today it's Tuesday, July 30th, and it's the day before the big FOMC meeting that we get for tomorrow, July 31st, and we got the first big batch of economic data ahead of this Fed meeting tomorrow. So let's go in and talk a little bit about some of the data we got. It's more than just the housing market. There's also some information in here that we got about the labor market. So first of all, from a housing perspective, prices again still elevated on a year-over-year basis. They're growing 6.8% on a year-over-year basis, but it is coming down from a revision last month of 7.25. So this deceleration in home prices, the Fed's going to want to like to see that and this is what we need to see in order to get that shelter component in line with what the Fed needs. But when you look at the jobs reports that we got today, very mixed picture. So first of all, the JOLTS report. This is the amount of job openings there are out in the economy and while it did fall slightly from the last month from 8.2 million to 8.1 million, it was much higher than was anticipated. So this would tell the Fed the labor market still is a little bit too tight. But we also got a consumer confidence report and we love the consumer confidence reports because that should correlate with spending and what we saw in the consumer confidence report that consumer confidence actually increased. It did increase in the month of July, but what we saw was the biggest increase was really in the expectations for the future. Confidence on the current conditions still remain weak. Now when we look at expectations for the future, that's good because that can mean that consumers may still spend, given the anticipation that things will get better in the future. That's good because that can mean that consumers may still spend, given the anticipation that things will get better in the future.

But when you dig underneath of some of the details in that consumer confidence report, there's this thing we like to look at called jobs plentiful and jobs hard to get. So this is the opinion from consumers that think that there's jobs that are plentiful out there. If they think that there's a lot of jobs out there, they feel confident they may spend more. But what we're seeing is this indicator has been deteriorating quite a bit over recent months and it deteriorated again in July. That contradicts what we're seeing in that job posting number.

The reason we bring this up is because the Fed has a very difficult job. It seems like they get one step forward with economic data that can support rate cuts as early as September and then they might get two steps back. So there still is a lot of more information that we'll get between now and September. We think a July rate cut tomorrow is absolutely off the table. We don't think that at all, but we will get a lot more information between now and September that can either support that rate cut or not. These are the things we're looking at.

We're going to look at the many different inflation indicators that we'll get between now and then. We'll also get two employment reports between now and then. We're going to want to look at not only the unemployment rate but also wages, because we've often said wages can be sticky and can result in higher inflation, and the Fed is going to be watching that. So sit tight, We'll be back tomorrow, on the 31st, with some results from the Fed meeting and we'll give you our idea of whether or not we think that September may be on the table for the first rate cut by the Fed. Thank you very much, and if you like this, please like. If you like our podcast, please like it, share it, send it to family members, and if you'd like to see other podcasts, please reach out to marketswithmegan. fm. Thank you.