As the summer heats up, the U.S. economy appears to be cooling down, with consumer spending slowing, delinquencies rising and the unemployment rate ticking higher to 4.1%, 70 basis points above its cycle low as of the end of July. Inflation has also moderated, easing to 3.0% in June, but remained too high to warrant policy easing in July. Meanwhile, international political issues have settled, but the U.S. election in November continues to loom on the horizon. Moving forward, investors are left to wonder whether the downshift in growth will extend to earnings and inflation, opening the door for a September rate cut, and how they should position for what could be a turbulent U.S. election season.

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