Summary

Middle East Turmoil Wall Street reacts this morning to the U.S. joining the fight in the Middle East. President Trump's decision to bomb Iran over the weekend prompts questions. How will Iran respond? Does the U. S. plan further action? What will happen to the price of oil, and how will markets react? Last week, the Dow Jones Industrial Average lost 1.8%, the S&P 500 dropped 1.3%, and the Nasdaq fell 1.1%. So far this year, the Dow is off by 1%, the S&P has gained 1.5%, and the Nasdaq is higher by 1%. U.S. action in the Middle East is overshadowing any economic news. Still, there are two highlights on the economic calendar. First, Fed Chairman Jerome Powell testifies before Congress this week. He visits the House side on Tuesday and then crosses over to the Senate on Wednesday. This is a timely address, as Mr. Powell will certainly be asked how the U.S. economy might be impacted by military involvement in the Middle East. As well, fresh inflation data is coming on Friday via the Personal Consumption Expenditures Index for May, which is expected to tick up from the prior reading. The Economic Call of the Week from Argus' Chief Economist Chris Graja is for continuing year-over-year growth in Real Personal Income Excluding Transfer Receipts (such as Social Security and Medicare). Chris says this is an important measure of consumers' health and spending power because it looks at income on an inflation-adjusted basis. It was up 2.1% in April. The new data will be released Friday in the report on May Personal Income and Outlays from the U.S. Bureau of Economic Analysis. While Chris doesn't forecast this indicator, we expect Friday's report to show that personal income is growing faster than inflation. We look for nominal personal income to be up 5.4% year over year, exceeding our expectation for a 2.3% increase in headline PCE inflation. Elsewhe