A White House memo on the economy is saying:

  • economic data, including June jobs report, not consistent with recession in 1st or 2nd quarter
  • US labor market strengthen put US in better position than many other countries to transition to lower inflation and steady growth
  • impact of energy and food prices on annual headline CPI in June will likely exceed 40% based on market expectations
  • Notes decline in energy prices since prices measured for June CPI
  • US gasoline price can be expected decline in weeks ahead
  • gasoline prices likely to account for more than 100% of expected increase in annual CPI in June report due on Wednesday
  • the economy appears to be transitioning into slower job and economic growth

The CPI data tomorrow is certainly going to be a shocker with the headline number rising by 1.1% and the core rate (ex food and energy) up 0.6%. The White House seems to be preparing the market for the worst, but also setting it up for better days ahead.