Biden’s Economic Agenda, Delta Impact, U.S. Inflation: Eco Day

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Welcome to Wednesday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

• The Senate passed a $3.5 trillion budget framework, as expected, that opens the way for President Joe Biden’s economic agenda
  • The party-line 50-49 vote will allow Democrats to implement their priorities and make a clear break from the policies of the Trump administration -- providing the party can agree on what those priorities are in the House
  • The Senate also passed a $550 billion infrastructure plan that represents the biggest burst of spending on U.S. public works in decades

• The biggest question in U.S. monetary policy will come a little closer to being answered this morning

  • While economists expect headline inflation to come in at 5.3% for July, only slightly lower than June’s 5.4% reading, they will be looking for any signs that price growth has already peaked
  • If inflation is actually looking transitory, then there will be less pressure on the Fed to quickly unwind stimulus
  • Some policy makers, like Dallas Fed President Robert Kaplan, are suggesting that inflation may remain elevated for longer than previously expected
• Even as delta risks loom, early signs from the third quarter show global growth accelerating and inflation peaking after its recent jump, a reassuring sign for policy makers and investors
  • In Asia, though, real-time indicators are already showing a hit as consumers stay home and airplanes idle on the tarmac
• Increasing downward pressure on the Chinese economy -- in particular from the delta variant wave -- means that targeted fiscal and monetary support is likely to be stepped up, according to Bloomberg Economics
  • The spread of the delta variant across much of the country is weighing on growth. The damage will be most visible in retail sales and production growth is also likely to slow

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