Global Data Watch Weekend: The shadow knows

The discussion centers on the U.S. economic outlook, particularly the resilience of consumer spending and the anticipated rebound in the labor market. Bruce expresses optimism about the potential for recoupling hiring and non-tech business spending, supported by strong consumer spending data and improving sentiment indicators. Joseph, however, emphasizes the critical role of the labor market, cautioning that the current strength of consumer spending, driven by a declining savings rate and wealth effects, is unsustainable without labor income picking up. They debate the impact of wealth distribution, with Bruce arguing that the middle-income bracket is currently driving consumption, while Joseph highlights increasing leverage and stress in certain sectors. They also explore the potential for the Fed to shift from easing to tightening, influenced by inflation levels and the appointment of a new Fed chair.