US retail sales are expected to increase 0.3% in tomorrow’s July report vs. the previous month, according to The Capital Spectator’s average point forecast for several econometric estimates. The mean prediction reflects a modest rebound after the previous month’s 0.3% decline.
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US labor productivity rebounded in the second quarter rising 1.3%–a solid revival from Q1’s 1.1% decline (revised up from the previously estimated 3.1% decline). But the trend remains weak—productivity increased only 0.5% for the 12 months through June. Yet labor unit costs are rising at a much faster rate—up 2.2% in year-over-year terms through Q2. “What it means is that inflation could be more problematic down the road, but we haven’t seen it yet,” says Gennadiy Goldberg, an economist at TD Securities. “It’s something to think about long term.” For the moment, however, the Treasury market appears to be preoccupied with other matters, namely, the risk that disinflation is gaining the upper hand once again.
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● US productivity posts sluggish rise in Q2
● A modest rebound for small business confidence in US
● US wholesale inventories jump in June as sales tick slightly higher
● Slower growth for China’s industrial output and retail spending in July
● Eurozone industrial activity is weaker than forecast in June
● Decline in UK jobless claims in July beats forecasts

The Federal Reserve’s Labor Market Conditions Index (LMCI) eased slightly in July, ticking down to 1.1 from 1.4 in the previous month. The slightly positive value equates with a labor market that’s expanding, but at a sluggish rate. Yet translating LMCI’s historical record into recession risk estimates via a probit model still indicates that the broad macro trend remains positive for the US. That’s also the message in the jobless claims data and a real-time estimate of business conditions via market numbers. We’ll have a more reliable estimate of recession risk through July with the monthly update of the Economic Trend & Momentum indices that’s scheduled for later this month. Meantime, the early clues suggest that macro risk is still low for the US. To be precise, the current numbers suggest that the NBER isn’t likely to declare July as the start of a new recession.
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● The Fed’s Labor Market Conditions Index remains mildly positive in July
● NY Fed: US consumer spending expectations drop sharply in new survey
● Treasury market’s US inflation estimate is sliding
● Economic confidence in Germany slides to 9-month low in August
● China devalues its currency
● Will China’s devaluation spark a currency war?

Positive price momentum is in short supply these days among the major asset classes. Is that a bearish signal? Well, let’s put it this way: the current technical profile doesn’t inspire a lot of confidence about the near-term outlook for asset prices.
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● Rise in US payrolls in July suggest a Sep rate hike
● US consumer credit in June posts bigger-than-expected gain
● Eurozone investor confidence declines in August
● China’s stock market jumps on stimulus hopes
● Japan July Economy Watchers’ Current Index ticks up for July
● Bank of France expects slow but steady growth for France

● Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence
By Jerry Kaplan
Summary via publisher (Yale University Press)
After billions of dollars and fifty years of effort, researchers are finally cracking the code on artificial intelligence. As society stands on the cusp of unprecedented change, Jerry Kaplan unpacks the latest advances in robotics, machine learning, and perception powering systems that rival or exceed human capabilities. Driverless cars, robotic helpers, and intelligent agents that promote our interests have the potential to usher in a new age of affluence and leisure — but as Kaplan warns, the transition may be protracted and brutal unless we address the two great scourges of the modern developed world: volatile labor markets and income inequality. He proposes innovative, free-market adjustments to our economic system and social policies to avoid an extended period of social turmoil. His timely and accessible analysis of the promise and perils of artificial intelligence is a must-read for business leaders and policy makers on both sides of the aisle.
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US companies added 210,000 workers in July, the Labor Department reports. The gain matches Econoday.com’s consensus forecast. Although last month’s increase in private-sector payrolls was modestly below June’s 227,000 gain, today’s update continues to reflect a solid 2%-plus trend advance in year-over-year terms. The annual pace is still decelerating, but fractionally so. The bottom line: the labor market continues to expand at a healthy pace and for the moment the trend looks poised to endure. In turn, the case for a near-term rate hike by the Federal Reserve looks a bit stronger today.
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The Wall Street Journal’s Jon Hilsenrath — considered to be one of the most “well-connected” Fed reporters — writes today that “A Bad Jobs Report Still Might Not Shake Fed’s View.” In other words, today’s payrolls data from the Labor Department that’s scheduled for release later this morning at 08:30 am eastern isn’t likely to derail the central bank’s plans to start raising interest rates—perhaps as early as next month. Nonetheless, the near-term outlook for the timing of tighter monetary policy remains cloudy, based on the mixed signals in Treasury yields.
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