By now, most of our Legal Insurrection readers will have had a chuckle over The New York Times attempt to generate enthusiasm over the Democratic Party’s selected presidential candidate, Vice President Kamala Harris.
I decided to coin my own term, based on this example and the fact that Harris has been Biden’s co-pilot in the inflation plane: Kamalanomics.
This term will likely prove more accurate over the course of the next 90-plus days, as Americans begin reviewing the economic debris field.
To begin with, a weak jobs report that was so bad it could be be massaged triggered a stock sell-off.
Stocks sold off for a second straight session on Friday, and the Nasdaq confirmed it was in correction territory after a soft jobs report stoked fears of an oncoming recession.The Dow Jones Industrial Average fell nearly 1,000 points in morning trading before paring losses, slumping 610 points, or 1.5%, to 39,737.26. On Thursday, the Dow lost nearly 500 points.The S&P 500 dropped 1.8%, and the Nasdaq slid 2.4%. All three indexes finished with weekly losses of more than 2%.The Labor Department said nonfarm payrolls increased by 114,000 jobs last month, well short of the 175,000 of economists polled by Reuters, and the at least 200,000 that economists believe are needed to keep up with population growth. The unemployment rate jumped up to 4.3%, near a three-year high.
Federal Reserve Chairman Jerome Powell had also a negative outlook on the labor market.
Powell warned Wednesday that cracks are starting to form in the labor market, and the sudden jump to a 4.3% unemployment rate is the latest piece of evidence….It’s been a turbulent few weeks for markets, as some earnings reports have underwhelmed and fear about increased regulation of tech and lackluster AI performance have soured investors’ moods. Companies have reported US consumers have pulled back from restaurants and retailers, and this week some preliminary jobs data looked weak.
The hit to then markets due to lackluster performance in Artificial Intelligence (AI) and tech cannot be overstated.
The 10-year Treasury yield fell to its lowest since December as investors flooded into bonds for safety on the fear the Federal Reserve made a mistake this week by keeping interest rates at current levels.Some megacap names saw steep losses during the day, as Amazon’s second-quarter results sparked investor concerns about Big Tech’s blowout levels of artificial intelligence-related capital spending. The e-commerce giant slid 8.8% after missing the Street’s revenue estimates and issuing a disappointing forecast. Intel, meanwhile, cratered 26% after announcing weak guidance and layoffs. Nvidia lost 1.8%, following a 6% loss a day before.
As a result, the S&P 500 had its worst July in 10 years.
As of 11:00 AM ET on July 31, the S&P 500 has advanced 1% in the month. The broad-based index was actually down 0.4% headed into the final trading session, but encouraging financial reports from AMD and Microsoft renewed investor confidence in the artificial intelligence boom.Even so, the S&P 500 is headed toward its worst July since 2014.
But the plunge in the Stock Market is only one sign of an economy that is in a tailspin. A new industry survey shows that manufacturing activity contracted more sharply than expected in July.
The Institute for Supply Management’s (ISM) manufacturing index was 46.8 percent in July, down 1.7 percentage points from a month earlier.This was well below market expectations of 48.0 percent, according to Briefing.com, and marked the fourth consecutive month where the reading was below the 50-point mark separating expansion from contraction.”This is a very downbeat report underlining that the manufacturing sector continues to struggle,” Pantheon Macroeconomics senior US economist Oliver Allen wrote in a note to clients.
If Harris is going to LARP (Live Action Role Play) as President of the United States, then Bidenomics should be renamed Kamalanomics. I am sure her economy will live up to expectations. Hopefully, it will be brief.
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