PCE and the US Economic Outlook

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And we begin strong with Sarah Wolf, thrilled that she could join us this morning for briefing into this economic data and PC. Sarah, I want to get back to first principles CPI inflation course CPI, there's business inflation. What is PC? Why do I need a PCE index if I already have a CPI index.

I love that question. You're really getting down to the basics.

So CPI, if we remember from econ one oh one, is everything that you pay out of your own pocket. It's your basket of goods that comes out of your wallet. PCE is a more encompassing measure, so it incorporates everything you pay out of pocket, and.

Then things that get paid on behalf of you.

So think about healthcare insurance, so PC would capture a larger weight for health care insurance.

Or think about it if you're in the military.

The clothing that's purchased for you, and so the FED does like to look at PC as the preferred measure because it is a broader measure of inflation.

Is the disinflationary vector broken? Has it snapped to where we're leveling or can you dare say, give me an inflationary vector before this report?

I mean, we're just at the early days of getting the reacceleration and inflation.

I think that we could agree that.

You know, when we thought back to April, when we thought inflation data would start to accelerate off terraffs, we all thought, oh.

The summer and then and then it'll be over.

The reality is is that what we've heard from from earnings from companies is that inventory building was actually a lot stronger in the second quarter and that's helped keep prices low or through the summer, and that the price pressures are just starting to.

Trickle through right now.

We're really going to be getting more of that pressure in the coming month. So we're looking for a point three percent, which is an acceleration relative to the recent trend, but it's fairly mild. Uh, We're going to see that pick up and trend in that three month annualized pace, which.

Is going to start to accelerate higher.

Sarah, All morning, We've been talking to me or Chanda and JP Morgan win Thin, We've been talking to Katie Kati Kaminsky of Appa Simplex. We've all been talking about the potential for inflation in the US to diverge between Europe or let's just call it the rest of the world. You know, I'd like to hear your thoughts on that. I mean, should I be buying Oba glacio? Should I be buying basically French show it's on, you know, some of the things we're seeing between Germany and France here.

What do you say, Sarah, excuse me, he's out of control.

Well, I'm somebody's talking about you know, I'm trying to pronounce them.

Sarah, I think you.

I think you bring up a good point that what's happening with tears is twofold. First of all, businesses in the US are having to pay for a lot of these cares. So instead of businesses overseas that are exporting to the US taking the burden of the cost, a lot of that is hitting US businesses and in turn getting passed through to consumers.

So more of that price effect showing up in the US.

Add on top of that that we've seen a devaluation in the dollars appreciation and so that's.

Not helping with the inflation story in the US.

And actually that's appreciation and the dollar is keeping prices lower among our trading partners relative to the US.

What's your twelve months forward inflation number, CPI, before we do PCE, what's your statistic twelve months forward?

So twelve months forward, we're looking at inflation that's probably still somewhere around two and a half to three percent.

So we're getting that reacceleration, but it's going to be sticky, I think coming back down. It's really also going to depend on how much weakening we see in the economy. If we see persistent weakening through twenty twenty six, we could get that downward drag coming through the services.

Channel, say more likely than now.

We're actually going to be getting some reacceleration and growth going into twenty twenty six, just as these prices are picking up because you're getting the one big beautiful bill stimulus, you're getting the AI backstory.

But I don't think i've ever seen the survey that matches the excuse a study that matches a survey like we've just seen Sarah Wolf with us here. Sarah, I don't know if you saw this. Thank you to Bloomberg Television for alerting me on it. But folks, Canada GDP came in with stunning, stunning statistics. There's no other way to put it. Second quarter Canadian GDP, the forecast was a negative zero point seven and they came in at negative one point six. They came in with a lesser inflation.

I mean, the reality is is that there's going to be certain economies that are way more affected by US terriffs and the spillover from the slowdown we're seen in the US. Canada being one of the number one countries

And other consumers. So think about in Europe, they're actually getting a deflationary impulse from the slow down.

And so I do think that that's worth noting that the US is going to slow down and it's to take Canada and Mexico probably with it in this in this economic deceleration.

Well, Sarah, I think you hit the nail on the head here. Listen to this one. Experts on annualized from the US into Canada fell twenty seven percent on the quarter.

That is a huge, huge miss.

And you're seeing dollar CAD rise off the back of this, although not so much a little bit of spike here. But you know, talk to us about what this means for the dollar narrative. If you start seeing GDP in some of the US's largest trading partners coming off to that extent, you know, do you expect the dollar to rally or falling that news.

I mean, it's all about how we are relative to cern economy. So the US pad might appreciate, but if we.

Think about the trade that investors are.

Going to be putting on the US euro for example, that we're still seeing a relatively better situation in Europe and so there's going to be a little bit more of a diversified trade. There's still room for the dollar to depreciate further as the tear story starts to materialize. So I wouldn't discount the fact that just because we're getting a bit of a rally and the dollar off of this weeker using Canada, that that's going to be

The US paired with a better situation coming in from Europe, so they're going to be able to cut interest rates more, we could get further dollar depreciation.

So you guys do brilliant work. I mean, the legacy here of Stephen Roach and Richard Berners has been identified, and the Morgan Stanley excellence of Seth Carpenter and all great. Do you guys care what the price of beef is at the grocery store.

It matters to the extent that it's hitting consumer wallets.

Of course, we like to strip out food and energy, and Corea.

Strives me nuts. Lisa, Can you set out food and energy over the next month? Come on, Sarah, Nobody except fancy people like you strip out food and energy.

As a consumer economist, I agree with you. The food and.

Energy are the most important components that go into the basket when you think about the everyday consumer and how

We're commercial free for you into the top of the arm. Michael McKee will join us here in a bit, you lend us show the table, will join us as well. But right now we're looking it's not a cart and the milk. It's like, give me some one percent. Come on, Danian Larry Kudlow became famous.

Tom Sarah and I both strip out tomatoes, onions, and potatoes when we're looking at inflation. In India, you have to do it. They call them top. It's often referred to as top tomatoes, onions, potatoes get stripped right out.

But Sarah, I have to ask you absolutely.

You're you're a font of with Oh we have seris, we can. Why don't you bring in Elena.

Elena show you tel a former Bloomberg colleague of mine. Elena, Welcome to Bloomberg Surveillance. Let's talk a little bit about the inflationary pressures that are emanating from China to the rest of the world.

What are your thoughts there?

Well, I think that we can just quickly cover it and all go home, because that was largely as expected write this report. But seriously speaking, I think that today's report doesn't add much in terms of the new information. We already knew that consumers are still holding up. They are spending on goods, So goods spending increased by zero point nine percent in July, and we spend lesson services.

So that is telling me that consumers are getting.

Becoming more choosy in what they need to spend one.

They are stocking up again.

Look at the advanced report that also came out along with the data on inflation, we saw a huge increase in imports. So I think we have some kind of a dija here, because you know, we're talking up again ahead of the set of times.

Elina show Tavy whether us with the conference board, the senior economists there, Elena, let me ask you dumb. It's sound like Damien Woods us. I'll ask a dumb question. On a scale of zero to one hundred, where we say the tariffs have been passed on to the consumer in America. Where are we on that continuum from zero to one hundred. Are we like a ten where it's barely in effect or fifty midpoint or is there now becoming a huge effect of tariffs on our listeners and viewers.

I think we're in the early stages of that, and Sarah was referring to that as well earlier. I think we're in kind of like a twenty to thirty percent on that scale probably, you know, look at what is happening. So today we get an expiration of the Deminimus text tariff exemption. So that alone, according to the Conference Board research we published earlier this year, will add a few tenths of a percent to PC inflation later on this year.

Lena, Sorry about that, Elena. You know, I know you we could stick to the US here, but I'm going to talk about Canada here because this GDP print was pretty surprising to the downside that we just got at eight thirty this morning, and you know, we're seeing growth kind of you know, coming in a little bit across the board, and I'm seeing central banks literally across the board from Mexico to the UK, poland perhaps next week, the Philippines this week they're cutting rates. Are we missing

Well, you have to like when you disrupt the system, and that's what we see, right with all the new policies and the policy actions, something will break somewhere, right, so and you have to react to that. I just don't think that in terms of the US, we are, you know, heading into some kind of a downturn at this point. I think growth in the US is still solid despite all the disruptions, and it's a very tough choice for the FED what to do the next meeting and going forward.

We continue with you, Lena show TeV at the conference board, bandmarkets showing higher yields ten yure up a solid three basis points four point twenty three percent, thirty year one nine at five percent four point ninety one percent. Equities do better than before before the eight to thirty report, moving from negative twenty five futures about now negative eighteen futures. The Vics fourteen point five six with Julina Schilitzeva, Damian Sasor Damien.

Yes, Elena.

I mean, look, we've been talking all morning about the impact of inflation on growth, the impact of inflation on pretty much, you know, some of these local economies, not

Still?

I think we are we see a slowdown, and based on our conference board consumer confidence data, you do hear a lot of concerns about inflation and how that will impact consumers going forward.

So look at this report again this morning. So services were.

Pretty weak, even though goods spending rebounded from its tep it pace based in the second quarter of this year. So that tells me that, you know, consumers are really facing tough choices. They have to spend more on food and things like that that are necessities, and you know, they have to forego what could be a discretionary spending like going to Disney World or other things.

EULENUS, thank you so much. Let me show the tab at the conference point with this office key economic data. I do want a reviewer. We really focused on PCE Lisa Matteyo with that great effort at eight thirty. Personal income came out on plan. I don't have a revise number of personal spending. I do have a revision. It came in on plans zero point five percent, but a more buoyant prior eating of zero point three moves to zero point four. So again it's that tendency to that

It was quite interesting and also somewhat unnerving because there was this palpable sense of worry about what's going on with an independence and then of course Tom as you saw, there was a massive security presence there, massive.

Security presence, but the unnerving part into September October November. What are you watching in the data that leads to a stuff body of that unnerving.

Well, if we're talking about it in that sense, we're talking about what the FED is going to do a September, October, November, September, November, December meetings. And in this case we're looking at the inflation numbers and the jobs numbers.

And it was interesting to hear.

Chris Waller last night suggests a footnote that they're also following the ADP numbers and they have shown deterioration. They get the ADP numbers on a weekly basis and use them to form their own okay index, and they have been deteriorating since the last job's report.

And this is Waller's Reelhouse started Damien with this was a question about mister Waller. Now he's popping fifty beeps. Talk back down to twenty five basis point. With this economic study this morning, it screams moderation by the Fed, doesn't it?

Not? Necessarily?

I got that wrung, Damian. Please.

What we do see is is some spending increase on automobiles drove much of the increase overall, and automobiles, spending is expected to drop off some because the tariffs are going to affect and the auto companies have said they're going to be raising prices once we get to the twenty twenty six model year. Now I don't know exactly what that means, but you two are old enough like me to know that it was always when the football season started, they started the new car ads for the

Well, you know what, Mike, here's the thing. I'm looking at the PC data. I'm looking at soondy A's GDP data, and it's all on the screws. There's no news here. There's nothing really here. When I want to ask you is let's look forward one week from today when NFP comes out, and I want to ask your humble opinion here, your gut check here. You know, just a few months back, we were looking at peril prints of the one fifty

Well, there's two numbers that the FED has got to watch. One is the number of jobs created, and that has slowed tremendously, and the expectation is that it will continue to do so. But they are also following the unemployment rate, and that is the sign they have for what's happening to the overall economy. If people start losing jobs, they're much more worried. And at this point, to this point,

But Waller thinks it's not so much immigration. You have two questions.

First, one is important, Okay, the unemployment rate right now geist on global Wall Street and particularly Manhattan and Wall Street. Is anybody modeling out over five percent out there somewhere?

I have not seen over five percent.

I have seen four point five to four point six and that would be considered.

And this is because it's all immigration influenced.

Well, yeah, your denominator would change, and that would make the unemployment rate hold steady if there's nobody entering the labor force. So that's the question is what's going to

And that's what we have to keep an eye on.

Okay, nobody cares. All they care about is this is like make a movie like we need like Kevin Costner tonight at Fenway. We need James Earl Jones in the stands, right, you know, with the with the if you build it, They'll come or whatever feel the dreams. I mean, are you kidding me? Mike? We got the number one pitcher in baseball showing up in the Red Sox have joined the Hollywood trade. I don't know how to pronounce his last name. Peyton Coyle am I close to the picture.

Close.

Yeah, I'm somewhat close. He's the second round pick out of TCUs. It's like he was playing rookie league earlier in the season. A ball double, a ball triple A. The kid comes in tonight. It's got to be sold out. He's going up against the stud I mean, it's like the movies, Mike.

I suppose it is.

But this is one of the most interesting times of the year for stuff like this. What you're he's actually coming up a little early because it's September one when they can expand their rosters, so they're gonna.

See what they got here, Damien. Here's the quote from Ken Rose. The last picture to see such almost as quick a rise is the man he's facing Paul Theater.

Well, I look, I look.

I think what the Red Sox are two and a half games up on the wildcard. I think the Youanks are two games up on the wildcard?

Is that right?

The Blue Jays?

Yeah, but we're not going to catch them. We're looking for one. We're just trying to get a wildcard bid here. But I think that is it's just going to be an interesting Uh, It's going to be an interesting postseason. If you have the Blue Jays, the Red Sox and the Yankees all you know, dueling it out with who, the Astros, the Tigers.

You know, you.

Look at like stub Hub and you see what the resale prices are. Yeah right, they're going up for all of those teams. That's exactly right at Fedway. Interesting thing about Peyton Tall is that he's six or six, so he would look Tom right in the eye.

Wow.

You know, Tom is not a small person.

I went to a Dwight Yoakam concert and I said, directly behind Roger Clemens and he could barely get in the chair. He's so big. These guys are huge, huge bike.

Yeah.

Commit I did a thing with Derek Jeter and Alec Riguez once at the Marriott. They're like, they're like, you know my height, but they're twice the size.

Yeah, no, I know, enormous.

We get thirty seconds. Arnold'st Chapman best signing ever.

Oh no, not the best signing ever, but a good signing.

Uh, I mean, okay, we would say Baby Ruth was the best signing ever.

Well you could argue thank you for that, Okay, And the worst trade ever.

Lisa's this's been enough baseball talk, please okay Michael McKee with the economics.

Passed out behind the water.

Supportant here is Damien asked the right question as it moves us on to non firm payrolls and to inflation. We'll be bringing you that data if we survived Labor Day. Stay with us. More from Bloomberg Surveillance coming up after this.

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch US live on YouTube.

Good pull naudo ho, Damien says Sorr with this, this is your wheelhouse as we go into Mirahandon dollar, Indian Rupia out to an eighty level. Oh Indian okay, yeah, in India, Okia Rupia whatever, it's gone from forty to ninety. This is a This is a devaluation of a major world's currency, isn't it Well?

I mean, I think you know when you're talking about em currencies, and that's not Mira Chandon's wheelhouse. One binary clear she controls euro US dollar, the number one cross on the planet for JP Morgan that's her wheelhouse, and we're gonna ask her about G ten effects.

Not em so much, but I understand, you know, as an extension of what you're saying, this.

Is like Trump economics, Trump political theory having a reaction to somewhere.

Absolutely right.

Mari Shannon joins us JP Morgin here is Damien lectures me on the larger currencies. Me, let's just get to the JP Morgan call. When you synthesize Kasmi economics and look at all your work in Europe, strong euro or weak.

Euro, definitely stronger even from here we've been we've been calling for the one twenty two yo dollar forecast on the upside.

Yeah, I think that's that's as strong as we've seen here is Well, where is the tariff dynamic? Now? Are we nuances in tweaking or do you anticipate other major announcements into September?

The tariff We've we've been in macromarkets, been dealing with the tariff announcements and the potential for tariff announcements for almost more than a year now.

So I think it's.

Fair to see a lot of the businesses were prepared, a lot of the economists had already bigged this into their forecast. What we've see now is because the tariff implementation has taken longer than most people had expected, it's been a longer drawn out of pair. What you're actually seeing is that the growth forecast had gotten too pessimistic and now you're actually seen.

Upside revisions to growth outlook.

Obviously, there's more stuff in the pipeline, there's sectoral talis that can can take a bite out of growth, But as far as we've seen it right now, things right now, it does look like European growth is on a stronger footing, and it's certainly an improvement relative to last year, which is not the same for the US.

Mira. I would love nothing more than to ask you about real yield differentials, growth differentials, fed credibility here with cook eurofiscal spending. But the number one question in my mind is why is it taking you so long to come on the show here with me and Tom? Because is it the at any rate podcast? Because I know it's taking up a lot of your time. By the way, Tom, it is the best. It is a Musclessen. I mean, every new episode is better than any of this podcast

Cool.

But now that I have you here, Mirah, because I am such a huge fan, I want to ask you about euro dollar because at the beginning of this year, you know, it was tough to find anyone calling for a stronger euro. I mean, we were at one o two and many expected the cross to test parody. Today we're at one seventeen. You're calling for one twenty two. We're already up a full thirteen percent year to date and it's only August or end.

Of AUGUSTA talk to us a little bit about the call.

You know what's going to drive you know, euro dollar two and twenty two over the near term.

Yeah, I mean the big the big game changer to be fair at this, you know, in March was the German fiscal u turn.

Before that, if we.

Spoke about the euro dollar call, I would have said, we'll get tarifs you Arizona count.

Leaf do anything about it.

All we're going to get is ecb raid cuts and you're a dollar is going to plummet and it's not really going to fix the growth problem. Now we've got the German fiscal in play, it hasn't even arguably started to hit the numbers yet, but it is some pointing sentiment. And uh so you have a lot of underlying resilience.

To the trade war, so to speak.

Secondly, what we're seeing is that that has been a US catchdown story. Now US grew are two twenty eight percent last year this year projected to grow, you know, just one and.

A half percent.

Is it is growth falling off a cliff, No, but it is catching down. Meanwhile, you're U two at twenty eight last year and we're thinking closer to one and a half percent. So it's about this growth convergence story in a way, and the real yeals you know, aspect. I think it captures a lot of the things that you mentioned. Look, we're looking at two year if you look at you know, shorter tenors, real yields in the US, we're at we're at almost two two and a half

At the end of the.

Adjusted for inflation, you are seeing a deterioration in the dollars fundamentals, which is really the key driver here, and it is suggesting you're.

A dollar going further.

Particularly fed independent is an issue that is constrained on what they can do.

Well, Mira, you mentioned real yield differentials, and you really mentioned, you know, have things changed in Germany earlier this year, and how that sort of catalyzed your call. But I got to point your direction and the post Liberation day FX hedge flows, right, You've written about this extensively, how dour hedging from foreign investors into the US queen market has been driving at the margin a lot of what you're seeing in your dollar. Is that going to continue?

So me actually, the challenge with the hedge ratio data is that you don't get it on a tandy manner. There are some countries that do release it on a timely manner, you know, like like Denmark for example. We do get this data. It's publicly available, and what he's seen is for the last three months after that initial adjustment and the FX hedge ratio higher, for the last three months they've been basically unchanged. So there is this chatter of well, have the hedge ratios flows that you know,

Well.

We haven't really seen this breaklower a week er and the dollar that people have.

Been calling for.

And what that means for the hedgers is that there's no real urgency or catalysts to get them to chase price action if you think that is going to.

Be Marri Chandon with us at JP Morgan this morning. We welcome all of you across the nation. Yeah, we're sliding into the Labor day weekend. Mirra Shandon's working, no doubt the spanking new JP Morgan building. Damien Sansaradai are here with Lisa Mateo and Michael Barr. Good morning on YouTube. We're really pushing this into the autumnal season from your office from home. Consider YouTube a new digital media mirror. This is really important and Damien alerted me to it.

I think it's going to be a dominant factor.

And in fact, post Liberation Day, the biggest you know, for currencies, we care about differentiation, you know, we care less about things when they're moving the same direction. So with Liberation Day, the biggest source of differentiation that we got among countries was tatiffs are universal that US is applying. It's inflationary for the US, it's deflationary for.

The rest of the world.

And I think that's the part that really I think became a thorne on dollar side. Essentially, you have a situation where you've got inflation expectations going up, growth moderating the FED, and a sticky situation can be should we eased, should be produtized, growth, should be product inflation that as a set southside are getting a deflationary impulse or inflation is less of a big deal, and in fact they're doing fiscal policy as well physcal spending.

So your monc.

Policy makes is ready grow supportive outside of the US.

Well, you just heard there from Maria Channon, Folks. Is your conversation for September, October and into twenty twenty six. Damien, I think there's nothing greater than this. This goes back to Thatcher expect the unexpected. I'm looking at bananas. Have you seen beef prices? I mean we're eating tofu. To Lisa, are you having to food Labor day weekend mirror? Channon's

Yeah, it is.

And for me, it's just look to emerging markets. And I know it's not your remit mirror, but I look at emerging markets and today's char pack that I just put out. I looked at the nineteen major emerging markets, and these central banks have injected one thousand, four hundred and seventy five basis points of SMUs into their markets over the past year or alone. Yet twelve of nineteen I've seen two year real yields rise over the last year,

Are you surprised about that?

Absolutely? I mean it makes a lot of sense.

And in fact, if you look at more of the fundamental details as well, things like overall indebtedness of the government, the external balances, you know, the kind of account deficits, the physical deficits are in much better.

Shape in EM.

So yeah, I mean that the policy makes it more positive, and some of the underlying fundamentals, one could argue, are more positive as well. So nobodybody's overly excited about growth in EM and in Europe. I think the key differentiator here is that US is looking less attractive and the rest of the world.

Is actually showing resilience.

In some silver linings.

Mirror are you into the new office, shows A P.

Morgan, He is in London, London, you're in London.

They're out of the US to US rates. But now global effects.

Yeah, I can understand. Miraa, Thank you so much. Don't be a stranger. This is usually wonderful to stay with us. More from Bloomberg Surveillance coming up after this.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.

Right now, to get the market open, we're going to go back to economics and talk to someone who's just absolutely exquisite at this Francis donald Is at the Royal Bank of Canada RBC. Francis, I've got to migrate and do an audible over to your Canada this morning. Were you surprised by the Canadian economic data amid this trade war?

Well, you might have seen Canadian growth fell sharply in the second quarter, but of course it did. Most economies are still experiencing sizable distortions to the trade war.

Business sentiment was down. Is that a big surprise?

And trade data is continuing to produce some very big dislocations globally, so not a big surprise. What's more of a surprise with Canada is I think on getting into year end, we're going to see some sizable improvements in the Canada story.

Later Q three into Q four. What part of our economy should our listeners and viewers study? Is it consumption? Is it an investment? Something different?

I actually have been surprised how different my own economic presentations have been for clients as we think about where is the US economy? It's been so interesting to me that almost all of the conversations I have are about these big structural trends that are hitting the US and appear to be hitting them in real time. For example, I'm not often asked, what is your non farm payrolls forecast for next Friday?

But what is really.

Happening with the supply side of labor? Are we going to see a labor shortage? I no longer get asked, you know what, specifically, when is the US debt story going to blow up? But what are the implications of high rates on alongside? What are the implications of fiscal

Francis.

We've seen this weaker dollar narrative play out, yet you know, we aren't seeing capital flows into foreign markets out of the US.

Here.

I'm curious, you know, if the dollar continues to weaken or even if it recovers from that matter, you know, what's the story for capital flows? Is there any potential for flows to you know, I'm talking when I say capital flows, obviously i'm talking FDI and portfolio flows. What's the extent to which you can see that sort of you know, happen.

Yeah, I think you're.

Getting to the core of the is the US exceptionalism story still in play? And as Tom noted earlier, we still have some big hits to growth happening outside the United States.

What I'm watching for in the US is are we going to.

See the productivity start to pick up in a way where American exceptionalism can be reflected in strong capex, strong business development, and really seeing those productivity numbers start to rise.

Is capital flow going to return meaningfully to the United States?

So what are some twelve months forward nominal and real GDP. To me, it's a huge mystery.

So we have what we call a stagflation light type of outlook, which is growth that is comfortably low but not collaxing.

So that's one, you know, between one and two percent.

The problem is the inflation side of this secure, which is that we continue to see above two percent inflation and getting it as high in the next six months is three point four on both the CPI and the PCI number. So you're seeing this phenomenal tension in the US economy, and what worries me about it is that it's not particularly aggressive. It's not pandemic level inflation that calls for clear policy response. It's a very nefarious, uncomfortable,

Fransis, I want you to describe how you study net exports, the exports leaving America and the imports coming into America. How do you study that back end of the GDP equation.

At this point by sector?

And that's effectively what we're doing for all elements of that GDP equals C plus I plus. You know, the standard way of looking at the economy is very very top down, but there's two things happening that mean we have to go much more bottom up than we would have a is sector bisector because we're getting these substantial distortions from everything from autos to consumer imports, from China. But we also have to do this by consumer segment.

Instead to Americas. Maybe that's more poetic for you, Tom.

We are seeing different consumer behaviors between high income households and low income households, and importantly, they're operating on different cycles. So I no longer find it valuable with most headline economic data to say GDP will be at one point five percent.

That's not helping companies and it's.

Not helping markets understand the granularity that's happening. Because the truth is that there are sectors that are suffering very deeply in the United States right now. Housing is one of them, trade exposed sectors or another, and there are sectors that are doing phenomenally well and will continue to do so. So sector bisector breakdown.

Unfortunately, Tom, it's a little more work. We have to work through our lunch breaks.

It's just fascinating, to say the least. Let's leave it there, Francis Donald, thank you so much, your trooper to join us here. And Friday is it Labor Day in Canada? Francis, that would be Monday, Monday.

Yeah, they get off.

They have Monday. Okay, They're like, I don't know.

I mean, come on, you've never been to Canada before. I've been to Canada. I've never been to day Francis do. Thank you so much just for we got to do a panel her in the fall. Francis, thank you so much. Stay with us.

More from Bloomberg Surveillance coming up after this.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.

At the coffee tail bar at the US Open, it's time you can order an espresso martini in the morning or the new iced o Tiami Sue iced Tarami Sue. It's made with cold brew chocolate syrup. How do you pronounce whatever? Mars coupone?

My goodness, yes, Mars copone moose?

Okay at this time of the morning, sure, it's never too late, okay.

The newspapers Lisa Matteo, okay, super coffee.

This one, okay, well you do that, okay.

So this article actually stood out to me it's from the Wall Street Journal. But it was a really good look into higher prices and how that's affecting because of the cost of twists, how they're passing on to consumers.

So this was a big thing.

They pointed out a few things. Right.

We saw companies like Hormel Food, Jam, Smucker, Ace Hardware. They all said they're going to raise their prices. You had retailers like Walmart, Target, best Buy. They say some of their terror related price increases already in place. My daughter came home from a Target run gave me the receipt. I was surprised there was. It was a lot larger. It's a micro yeah, yeah, yeah, and it starts to add up though. That's the problem. But here's the thing.

Dollar General.

They're saying that even though the prices are higher, consumers are still buying and so far exactly is a big sol but they're warning how soon you can you can take that.

I'm looking at the article, you know as well, and it's all food prices. I mean, are we releasing price increases that Dick's Sporting Goods and Victoria's secret. I mean, are we seeing it hit at retail like real retail or is it more just you know I that's where I think they're gonna have trouble coming on price increases.

And I know we've got to go on to the next story. But Liam Denning, folks, I'll retweet it out without question, the essay of the week on across America. You're electric in gas utility bill Yep, unreal, absolutely unreal. The next one that is great.

Okay, so this one my husband will like this because I wake up right at the wee hours of the morning and sometimes he gets up mad dash outside forgets to put out the recycling and the garbage right, so he rushes out. But now there is some new technology that could help him and others who have to do that mad dash self driving trash receptacles. It is in the work. I'm just letting you know that you could order it and demand like an uber. It just takes it out to the curb for you.

Okay.

So this is at least I have to I have to chime in area. This is not only real. This is also something that at the golf course at time our country club, they have the lawnmowers along the fairway. So they basically have saved so much money by basically getting these AI programmed lawnmowers to just go back and forth. They know how to charge themselves up, come out of the charger and just you know, kind of and.

Cut the lawn, cut the lawn. So it's the same thing here. It's and this is even simpler to do.

I mean, all you're asking is to take a you know, for a trash can to you know, leave your garage, you know, go to the end of the curb.

It's a huge pot because we have you know, a growing garbage time.

There's a thing or two about taking the garbage out.

Right to no.

Silence.

That's just one of the things that they're doing. And also electric powered garbage trucks, you know, because they're so loud sometimes to feel complain about the noise. So could be on the way electric powered garbage trucks too. Okay, all right, I want to go to the US Open. Okay, yes, because Naomi Osaka she advanced, right, But what was actually the star of the US Open are her laboo boos? Okay she had two of them. They were blinged out. Okay, they were very very and she named them after famous

Okay.

But she is just another one. You know, all the celebrities are h She's they're attached to her bag and they each little laboo buo has their own little tiny tennis racket. It's the cutest thing ever.

And this she's like making these endorsing news. It's like her.

They're like customized for her. But what it's doing, it's sparking again the whole la boo boo craze. I mean, we've gone so.

Far from Stan Smith, Rosco Tanner.

I mean these, I mean all the ones you're wearing around their bag.

Yes, the new Mini one sold out.

It just came out there, sold out, the Mini ones. It's a craze.

Thank you, Lisa Matteo on the newspapers.

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