JPM US Weekly Prospects

J P M O R G A N North America Economic Research 31 July 2026

Economic and Policy Research Michael Feroli ( Michael S Hanson ( Abiel Reinhart ( JPMorgan Chase Bank NA

Contents United States 2 US Focus: When will nonres. construction stabilize? 4 Global Data Watch: And isn’t it ironic? 5 US Indicator forecasts 9 J.P. Morgan US forecast 19 US economic calendar 20 See page 21 for analyst certification and important disclosures.

Michael Feroli ( Abiel Reinhart ( North America Economic Research US Weekly Prospects JPMORGAN JPMorgan Chase Bank NA 31 July 2026 Michael S Hanson ( Bennett Parrish (

United States The FOMC and its discontents As noted, this week’s FOMC decision to keep policy • Chair Warsh’s ineffective defense of Fed credibility unchanged was accompanied by three dissents, which is an may compel the FOMC to hike by year-end uncommonly large number. All three are regional bank presi- • We see a move in December, but hot inflation readings dents (Hammack, Kashkari, and Logan), and all three wanted could result in a hike as early as September to raise rates by 25bp this week. Each published a statement • Conversely, softer numbers combined with June’s low explaining their reasons for dissenting, and each contained a inflation reading could delay any action number of shared themes: a growing impatience with five- plus years of above-target inflation and worries that it could • We expect payrolls to rise 75k next week, with a tem- become embedded; an assessment that even after accounting porary rise in the unemployment rate to 4.3% for recent shocks, inflation would remain elevated; a belief The main event of this week was the the FOMC meeting. The that the economy is at full employment, so inflation is the Committee left rates on hold, as expected, with three hawkish more pressing concern; and a worry that avoiding small dissents. However, the big news came in the post-meeting moves now would necessitate more aggressive moves later. press conference. Warsh’s performance surprised and, based All three dissented earlier in the year over language and have on the market reaction, disappointed many observers—our- skewed hawkish, so they offer a limited signal as to where the selves included. Fed chairs have been hosting these press con- center of the Committee currently sits. ferences since 2012, and this week’s was, in our opinion, the most troubling yet by a long shot. Warsh failed to tie his Hammack and Logan also said that they believe current poli- tough talk on inflation to any conditional plan of action. And cy is not sufficiently restrictive. Since late last year, our call under the banner of not providing forward guidance, the chair for the Fed’s next move to be a hike was conditioned in large didn’t give any color on the reasoning for the Committee’s part on the idea that the rest of the FOMC would—eventual- decision to remain on hold earlier that day. ly—reach the same conclusion. As noted above, recent events put new urgency into that decision. That said, our forecast Most objectionable, from a central banker's perspective, was threads the case between hiking and holding, and Chair War- Warsh’s casting doubt on the use of PCE as the Fed’s focus sh may appeal to his colleagues to be patient until the task for inflation. The chair said the PCE was “the proper standard forces deliver some early findings. So we see two-sided risks answer” to the Fed’s preferred inflation measure. But then he to the Fed call: that the Committee may need to hike multiple added “who knows come after next January what we might times, and that the data flow will manage to cool just enough say about strategy. I suspect the task forces might have some- to keep policy where it is. We see a greater risk for the former thing to add.” This combined two doubts the market has had than the latter, and balance those risks with a single hike at about Warsh. First, that he might try to “move the goalposts” year-end. Incoming data should do a lot to clarify the upcom- on inflation, by redefining the target measure. Second, that ing decisions facing the FOMC. the task forces are there to rubber stamp the chair’s policy preferences. In either case, the…