In his Jackson Hole speech, Fed Chair Powell held the line on needing more data before beginning tapering. Some had thought this speech could be a venue for a shift in tone or language, but that never materialized, with Powell wanting to see how the labor market evolves over the coming months. He noted that “with vaccinations rising, schools reopening, and enhanced unemployment benefits ending, some factors that may be holding back job seekers are likely fading” and also that inflation has been driven by mostly COVID-related factors and that broad measures of wage growth aren’t yet a concern.
July’s personal income rose 1.1%, which significantly beat expectations of a 0.3% rise. However, real consumption hit a snag and declined by 0.1%, in line with expectations. Despite the income gain, consumption was under pressure with Delta and the fading stimulus impacts.
Second quarter GDP was slightly revised up to 6.6%, from a 6.5% annualized growth rate.