From the positive news department, the NFIB Small Business Optimism Index rose to 104.7 in July, just below all-time highs as expectations for business conditions, real sales, and expansion made solid gains. "While many are talking about a slowing economy and possible signs of a recession, the 3rd largest economy in the world continues to defy expectations, generating output, creating value, and expanding the economy," said NFIB President and CEO Juanita D. Duggan. "Small business owners want to grow their operations, and the only thing stopping them is finding qualified workers." Small businesses are the lifeblood of the US economy and from all signs, it is generating a solid working environment.
Consumer inflation edged higher in July due in part to rising gasoline and housing costs. A bit warmer-than-expected Core Consumer Price Index (CPI) for July was reported as it rose 0.3% from June versus the 0.2% expected while year-over-year it increased 2.2% from 2.1%. Headline CPI rose 1.8% from 1.6% in the 12 months ended in July. Not a big surge higher but above the July numbers. Inflation remains on the cool side which has helped to keep interest rates historically low.
Many pundits continue to talk of a recession indicator in the closely watched 2- and 10-year yield spread, as it narrowed to three basis points yesterday. If an inversion were to occur, where long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality, a recession comes in about 22 months on average after the curve inverts. That would be almost two-years from now, where in that time span anything can take place. The Federal Reserve Bank of the US has said it will use all of its power to avoid an economic slowdown.