Wall Street thinks the US economy is getting back to normal. The election could change that

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

New data shows weakening in the US economy – Friday’s jobs report showed that unemployment ticked up to 4.1% in June. Credit card delinquencies and debt are also on the rise. Consumers, who represent about two-thirds of the economy, are shopping less.

But investors don’t seem to mind it.

Both the S&P 500 and Nasdaq hit new record highs on Friday following the release of the employment report. All major indexes closed out the shortened trading week higher, and the S&P 500 is up a staggering 17% thus far year-to-date.

So what gives? One simple explanation lies within the hallowed halls of the Federal Reserve’s HQ in DC. Inflation is easing, and so is economic growth – that combination means interest rate cuts could be on their way.

Some analysts think there’s more to it. These numbers represent a return to a more normalized pre-pandemic economy. Traders love normal.

But there could be some surprises coming as the election landscape in the US heats up and President Joe Biden faces tough questions in recent days about the viability of his reelection campaign.

Before the Bell spoke with Michael Reynolds, vice president of investment strategy at Glenmede, about investors, the economy and political landscape.

Before the Bell: Markets barely reacted to Friday’s jobs report. Were you expecting that?

Michael Reynolds: It seemed like a non-event for markets because it’s a status quo continuation of trends that have been ongoing and a normalization of the labor market.

The Fed has an estimate of what