June jobs data is a ‘reality check for the real economy’ – JPMorgan’s David Kelly

[Stock quotes graphs and American dollar bill] Konoplytska The June jobs report [https://seekingalpha.com/news/4609624-nonfarm-payrolls-growth-cools-more-than-expected-in-june] served as a "reality check for the real economy," revealing what JPMorgan Asset Management chief global strategist David Kelly calls a "tortoise of an economy" marked by sluggish growth. In an interview with CNBC, Kelly pointed to weak job gains, declining real wages for a third consecutive month, and the Atlanta Fed's projection of just over 1% growth for the second quarter as evidence of broader economic malaise. Kelly emphasized the “tremendous divergence” between the excitement surrounding AI and tech on Wall Street and the struggles of the broader economy. "I think it's just very important for those of us looking at financial markets to take our eyes off that for a moment to recognize what's going on in the real economy because there's a huge tension here between booming tech and really sluggish everything else," he said. The strategist also warned about mounting pressures on consumers and government finances. With the federal deficit projected to exceed $2T this year and approximately $50B in tariff refunds paid out last month, the government's ability to stimulate consumers is increasingly limited. "The lower middle-income consumers really aren't okay. They're kind of struggling here," Kelly noted, adding that without continued momentum in the tech sector, "we could find ourselves in a more serious problem." Despite concerns about economic weakness, Kelly sees a silver lining for monetary policy: rate hikes are likely off the table. He believes the markets were pricing in too much tightening, estimating the FOMC voting members favor holding rates steady by roughly eight to four. "This is not an inflation-generating economy," he explained. "We've got Teflon inflation in America. It won't stick, and it won't stick because you can't get a price-wage spiral if wages don't react." Looking ahead, Kelly forecasts inflation will continue declining, with CPI falling from the May peak of 4.2% to approximately 3% by December and potentially below 2% by May of next year. He cited rising housing vacancies and slowing rental growth as key factors, noting that rents constitute about a third of CPI calculations and are expected to ease further. MORE ON THE U.S. ECONOMY * Mortgage rates hit seven-week low, housing activity estimated to bolster through summer [https://seekingalpha.com/news/4609724-mortgage-rates-hit-seven-week-low-housing-activity-estimated-to-bolster-through-summer#source=url_first_level%3Amarket-news%7Csection%3Aus-economy%7Csection_asset%3Anews_title] * Weak job data handed Bitcoin a lifeline: BTC price reclaims $62K; who else helped? [https://seekingalpha.com/news/4609678-weak-job-data-handed-bitcoin-a-lifeline-btc-price-reclaims-62k-who-else-helped#source=url_first_level%3Amarket-news%7Csection%3Aus-economy%7Csection_asset%3Anews_title] * Factory orders fall less than expected in May as April number is revised higher [https://seekingalpha.com/news/4609674-factory-orders-fall-less-than-expected-in-may-as-april-number-is-revised-higher#source=url_first_level%3Amarket-news%7Csection%3Aus-economy%7Csection_asset%3Anews_title] * Odds of rate hike before year-end fall; odds for one 25 bps cut rise [https://seekingalpha.com/news/4609666-odds-of-rate-hike-before-year-end-fall-odds-for-one-25-bps-cut-rise#source=url_first_level%3Amarket-news%7Csection%3Aus-economy%7Csection_asset%3Anews_title] * U.S. jobless claims fall to 215K, beating estimates as labor market holds firm [https://seekingalpha.com/news/4609641-us-jobless-claims-fall-to-215k-beating-estimates-as-labor-market-holds-firm#source=url_first_level%3Amarket-news%7Csection%3Aus-economy%7Csection_asset%3Anews_title]