While recent economic data has turned choppy, the underlying trends still point toward resilience. As earnings season begins, we’re watching for confirmation that margins are holding, inflation expectations remain anchored, and policy support is taking shape beneath the surface.
Key Insights:
- Private sector job growth slowed to +74,000 in June, while the headline unemployment rate declined to 4.1%, a sign that labor supply constraints, not demand weakness, could be driving the moderation.
- Average hourly earnings rose just +0.2% month-over-month, keeping year-over-year wage growth at 3.7%, consistent with a disinflationary trend.
- Q2 S&P 500 earnings are expected to grow +5.8%, with Technology (+17.7%) and Communications (+31.8%) leading the way.
- Real GDP growth for Q2 has been revised down to +2.6% annualized according to the Atlanta Fed GDPNow model, but 2026 forecasts are getting some support from anticipated Fed easing and fiscal stimulus.
- Despite headline noise, market-based inflation expectations remain stable, and financial conditions are likely to ease into year-end as rate cuts approach.
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