According to Paul Donovan, chief economist at UBS, the US employment statistics for April is expected to show modest job gains and stable salaries rather than the effects of the conflict. Additionally, he points out that Michigan consumers' expectations for inflation only matter if they alter their behavior. However, politically, they fuel a perceived affordability issue that puts pressure on the US administration during the conflict, which in turn affects attitude toward the US dollar (USD).
Politics, employment, and inflation expectations
"Iran attacked the United Arab Emirates and US Navy ships. Airstrikes were carried out by the US on Iran. According to the Washington Post, Iran still has sizable missile and launcher supplies, and the US CIA thinks the country's administration can avoid further economic difficulties for a few months. This implies that the US needs to make more concessions or the Strait of Hormuz will be closed for longer than markets anticipate, which implies less pressure on Iran to reach a deal with the US."
"Trump gave the EU until July 4th to ratify a trade agreement. Due of their tendency to change (or be forgotten), markets do not give these deadlines much weight. The 10% Section 122 duties were declared unlawful by a US trade court, but solely in relation to the plaintiffs.
The conflict should not have an impact on US employment numbers in April (too soon). Deporting undocumented immigrants has been linked to a decrease in citizen employment, according to research (basically, if bricklayers are deported, roofers have nothing to put a roof on). Stable earnings growth and modest employment improvements are anticipated.
"Michigan consumer mood data contains inflation “expectations”. Economically, these figures are only significant if they lead to a shift in consumer behavior. Politically, they put pressure on the administration over the war and add to the alleged affordability crisis.
Politics, employment, and inflation expectations
"Iran attacked the United Arab Emirates and US Navy ships. Airstrikes were carried out by the US on Iran. According to the Washington Post, Iran still has sizable missile and launcher supplies, and the US CIA thinks the country's administration can avoid further economic difficulties for a few months. This implies that the US needs to make more concessions or the Strait of Hormuz will be closed for longer than markets anticipate, which implies less pressure on Iran to reach a deal with the US."
"Trump gave the EU until July 4th to ratify a trade agreement. Due of their tendency to change (or be forgotten), markets do not give these deadlines much weight. The 10% Section 122 duties were declared unlawful by a US trade court, but solely in relation to the plaintiffs.
The conflict should not have an impact on US employment numbers in April (too soon). Deporting undocumented immigrants has been linked to a decrease in citizen employment, according to research (basically, if bricklayers are deported, roofers have nothing to put a roof on). Stable earnings growth and modest employment improvements are anticipated.
"Michigan consumer mood data contains inflation “expectations”. Economically, these figures are only significant if they lead to a shift in consumer behavior. Politically, they put pressure on the administration over the war and add to the alleged affordability crisis.
