Macro Briefing: 3 August 2023

* Will US debt downgrade change Washington’s spending habits? Don’t count on it
* Treasury Sec. Yellen says US credit downgrade “puzzling” and “unwarranted”
* China service sector activity continues to “rise solidly” in July via PMI survey data
* Eurozone economy shrinks in July, falling to 8-month low, PMI survey data show
* Foreign buyers cut US home purchases to lowest level in 14 years
* US private-sector hiring slows in July but level remains strong via ADP data:

Ongoing improvement in supply-chain disruptions forecasts further easing in inflation, a research note from the Kansas City Federal Reserve advises. “Supply chain disruptions, as measured by the Global Supply Chain Pressure Index (GSCPI), increased dramatically during the pandemic, reaching unprecedented levels (blue line),” writes Nida Çakır Melek, senior economist at the regional Fed bank. “These supply shortages led to significant pressure on prices for goods, with core goods prices rising more than 7.5 percent from February 2021 to February 2022. However, since the start of 2022, supply chains have been improving steadily, helping cool core goods inflation (green line). Because core goods inflation has been following the GSCPI with a lag of several months, the most recent declines in the GSCPI suggest potential further declines in goods inflation in coming months.”