US Econ Notes July 31

Economics Date 31 July 2026 US Economic Notes

What you need to know for the week ahead Brett Ryan Senior US Economist Post Employment Conference Call: Matthew Luzzetti, Ph.D. Friday Aug 07, 9:00 am EST Chief US Economist To register for the call, please contact your DB sales rep or go to the following URL: Justin Weidner Economist PROD/PROD .link Amy Yang Commentary for Monday: This week’s economic calendar will provide several Economist data points for market participants to “play the ball” in Fed Chair Warsh’s words from his post-meeting press conference last week. As we noted in our recap (see “Fed Notes: July FOMC recap: Action (or lack thereof) speaks louder than words“), the FOMC held rates steady at 3-1/2 to 3-3/4 percent with three hawkish dissents to this decision – in line with our expectation and the market consensus. Chair Warsh outlined areas of debate amongst meeting participants, most notably the extent to which shocks were impacting output, employment, and prices. That said, he did not provide much detail around those discussions, presumably leaving that for the minutes. Though Warsh once again avoided forward guidance, he may have hinted at the potential for policy actions at upcoming meetings as the Committee worked to address the four key questions that Warsh noted were discussed at this meeting. Our baseline remains that the Fed raises rates by 50bps this year (25bps hikes in September and December).

Last week the three dissenters, Cleveland’s Hammack, Minneapolis’s Kashkari, and Dallas’s Logan, all gave their rationales for preferring to hike at the July meeting. Both Hammack and Logan argued that monetary policy is currently not restrictive enough to get inflation back to target. Indeed, Logan said that even after accounting for productivity and temporary supply shocks, “inflation appears to be trending toward the mid-2’s, not all the way to 2 percent”. Kashkari, however, saw a hike more as a risk management exercise in which he would “rather tighten policy incrementally” as they gather more data rather than waiting and potentially “concluding that even bolder actions were necessary.”

In terms of the upcoming Fedspeak, we will hear from Kansas City’s Schmid (Tuesday), St. Louis’s Musalem (Thursday) and Richmond’s Barkin (Friday), all of which are non-voters. While Barkin’s comments last Friday were balanced saying it was a “close call” as to whether rates are high enough to bring down inflation, Schmid and Musalem have leaned more hawkish, so we would expect their comments to hew closer to those laid out by the dissenters.

Of more import, however, will be Governor Cook’s economic outlook speech on Wednesday. While there has been little in the economic data since her mid-July

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31 July 2026 US Economic Notes

speech that would meaningfully impact her economic outlook, it will be interesting to see if her policy views have changed at all in the wake of the meeting. As a reminder, in that speech she stated that if she does not see “signs of disinflation soon” then she would be prepared to act.

Regarding the data docket, the main event will be Friday’s July employment report which we expect to show a slight uptick in headline (+65k forecast vs. +57k previously) and private (+65k vs. +49k) payrolls. Regarding other details of the establishment survey, we expect average hourly earnings (+0.3% vs. +0.3%) and hours worked (34.3hrs) to remain steady which would have the effect of keeping the year-over-year growth rate of our payroll proxy for nominal income unchanged at 4.4%.

More important will be the unemployment rate, which we expect to remain unchanged at 4.2%, though risks are tilted toward the rate rounding up to 4.3%, particularly, if we see a larger rebound in the labor force participation rate (LFPR). Last month, LFPR dropped by roughly 30bps to 61.55% - one factor behind the 11bps decline in the UR to an unrounded 4.19%. Our 4.23% forecast assumes LFPR rebounding to 61.73%.

That…