From Unicorn to Antlers

 It wasn’t too long ago that the unicorn of a soft landing. i.e., puncture of the post-Covid inflation bubble without a punishing recession, hove into view.  But now that we take a closer look, we espy a different beast, this one with antlers we might call the horns of a dilemma – stagflation.

 That brewing outcome was reinforced this morning with news from the Institute for Supply Management that its services purchasing managers index ticked down to 50.1 in July from 50.8 in June.  A survey of economists polled by Reuters had expected a rise to 51.8.  A reading above 50.0 indicates economic expansion, so the new index reading hints at a U.S. economy close to stall speed.

 The report comes on the heels of the July jobs data from the Bureau of Labor Statistics, showing only 73,000 net jobs creation and sharp downward revisions to May and June numbers.  The orange Florida man fired the BLS director after the release of the news on Friday.  It will be fascinating to see what the bureau releases next month and whether financial markets believe it.

Meanwhile, we’ll be watching next week’s consumer price index for July from the same BLS that the Florida man says is rigging numbers to make him look bad.