Next week will be a holiday-shortened trading week, with U.S. equity markets closed for Labor Day on Monday. With earnings of the vast majority of S&P 500 companies already out of the way, it’s expected to be relatively quiet. Market watchers can expect PMI surveys from S&P Global and the Institute for Supply Management (ISM), the Fed’s latest Beige Book, and an inflation reading from China. Gamestop, American Eagle Outfitters, and supermarket chain Kroger will release their earnings next week.

The Fed’s Beige Book
On Wednesday, the Federal Reserve will issue its latest Beige Book, an overview of the U.S. economy published eight times a year that reflects economic conditions across all 12 Federal Reserve districts. The latest issue could describe an economy that remains robust despite headwinds. Consumer spending, which accounts for more than two-thirds of U.S. gross domestic product (GDP)has held up despite the Fed’s rate hikes and persistently high inflation, while unemployment remains near multi-decade lows.

Prices in China
Next Saturday, China will release inflation figures for the month of August. This could be a critical release as the world’s second-biggest economy fell into deflation last month, with consumer prices falling 0.3% from a year ago. They’re projected to have rebounded 0.1% on an annual basis in August. China’s economy is facing a slowdown resulting from mounting debt, falling exports, a property bubble bust, and high youth unemployment. Deflation often takes hold during economic downturns as households delay purchases in anticipation of lower prices in the future. Lower spending directly impacts businesses and their profits, forcing firms to lay off workers, which in turn depresses household spending even more. This leads to a downward economic spiral that is difficult for governments and central banks to address.