Staff Reports
Despite liberals praising the so-called “solid” wage growth in May, consumers aren’t exactly throwing their cash around like confetti at a Biden rally. It looks like a penny-pinching mindset is hitting the wallets harder than expected, putting the brakes on runaway inflation.
The Personal Consumption Expenditures Price Index (PCEPI), a mouthful for government jargon, stayed as flat as a pancake from last month’s measly 0.3%. Even the core PCEPI is setting records for boredom, cooling down to a chilly 0.1% from April’s 0.3%.
Everyday Economics: Did higher-for-longer interest rates, heat wave cool hiring?https://t.co/598GZxKn0j
— The Center Square (@thecentersquare) June 29, 2024
Year-over-year, the core PCE is getting a haircut at 2.6%, down from a stubborn 2.8% that liberals pretended didn’t matter. In March, the Fed’s crystal ball readings pegged core inflation at 2.6% for 2024, with an unemployment rate steady at 4%. Guess what? Unemployment has hit that lucky number, and core PCE is behaving itself at the Fed’s forecast of 2.6%.
If this disinflation parade keeps marching along, there’s talk that the Federal Reserve might do something right for a change and cut rates before the clock strikes 2024.
Key figures coming in this week have everyone holding their breath—or not. The Institute for Supply Management is due to drop its Purchasing Managers’ Index (PMI) for manufacturing and services, which tracks economic activity. The manufacturing index is expected to continue its nosedive, while service sector sleuths think it’s hanging by a thread for June.
Meanwhile, construction spending for May is predicted to dive deeper than Biden’s poll numbers, primarily due to a slide in privately-owned housing starts that tanked by 3.8%. Thanks, job-killing regulations!
The Bureau of Labor Statistics Employment Situation report will be the week’s headliner, with forecasts suggesting a tighter labor market than a drum, pegging the unemployment rate at 4%.
Could sizzling June weather have knocked the wind out of hiring sails, with wage growth simmering down further? Or could financial conditions loosening up finally give the labor market the Red Bull it needs to regain momentum?
