3. Congress Marches Toward a September Government Shutdown

Joe Biden signed the Consolidated Appropriations Act, which authorized an additional borrowing of $1.7 trillion, on December 29, 2022, in order to keep the Government open through its fiscal year until September 30, 2023. There is an expectation of substantial resistance in the House to approve the 12 required spending bills needed to prevent a partial government shutdown. If these bills are not approved in September, it would result in the closure of non-essential services as early as October 2023. This situation will likely involve posturing and window dressing that will dominate the press in an election year, obfuscating from a more significant economic event likely to occur in September.

Consumer consumption and government spending have driven the revised GDP growth rate for the second quarter to 2.1%, a figure that was released yesterday. In our previous communication, we cautioned that the Core Consumer Price Index (CPI) for August, set to be released on September 13, is likely to exceed expectations. Despite this, our current caution may appear contradictory to the anticipation of a higher CPI. Nevertheless, we are forecasting a significant and unexpected decrease in consumer spending on goods and services, likely to take place in September.

Have a blessed week!

By Tony Christ