KEY DATA: Home Sales: +1.1%; Prices: +4.8%/ Leading Indicators: +0.3%/ Phila. Fed: down 7.6 points/ Claims: -1,000

IN A NUTSHELL: “With the housing market improving and the labor market firming, it will be interesting to see what the Fed says after next week’s FOMC meeting.”

WHAT IT MEANS: Apparently, what happens in May, stays in May. The sharp slowdown in hiring has disappeared and the softening in other areas looks like it was transitory. We see that once again in the plethora of data released today. Take housing, which is a key segment of the economy. The National Association of Realtors reported that existing home sales rose modestly in June. However, that was the fourth consecutive month of gains. The sales pace was the strongest in over nine years. So far this year, sales are up by 4.6% compared to the first six months of 2015, which is not too shabby. Prices are also up solidly. That prices are continued to increase at a decent pace was reinforced by the latest Federal Housing Finance Agency’s House Price Index, which rose by 0.2% in May and was up by 5.6% over the year. There are a variety of price measures created from a number of different sources and they tend to differ a bit on magnitude.   They all seem to show a firming in prices, though.

The May malaise led to a decline in the Conference Board’s Leading Economic Indicators Index. But that didn’t last long as it turned around in June. The index doesn’t say robust growth will follow, but it does indicate that we should expect moderate to solid gains in activity in the months ahead.

On the Manufacturing front, the Philadelphia Federal Reserve Bank’s July measure of manufacturing activity fell. However, the details were actually decent. Orders are now increasing moderately after having been down. Employment has stabilized and optimism about the future improved. So why respondents thought that business conditions softened in late June and early July is a mystery.

Finally, there was another decline in the weekly jobless claims number. It is hard to see that it could go much lower given the size of the economy and the normal worker turnover that occurs. Basically, firms are not letting anyone go except for exceptional circumstances.

MARKETS AND FED POLICY IMPLICATIONS: The FOMC meets next week and the members get a chance to once again backtrack from their comments about the economy they made in the previous meeting. This seems to be a pattern. The economy is good, then there are risks, then those risks have faded and the economy is getting better, then there are new risks, and so on. Isn’t it great that the Fed is data dependent in a world of volatile data? There is little (likely no) chance the members will do anything about rates next week. But I do expect them to put their feet in their mouths again, as conditions will likely change between July and the September meeting. But it is fun to watch the waffling every six or seven weeks. Actually, it is not. I love waffles, but only for breakfast, not in my central bankers. I would like some thinking that is not so impacted by short-term issues. Yes, inflation is still below target, but it is accelerating. Critically, the economy is in good shape and capable of handling another rate hike, when or if this group of turtles ever get out of their shells.