US Inflation Update and Economic Insights
As we approach the upcoming update on US inflation for April, forecasts suggest a slight decrease in inflation rates. However, the persistence of pricing pressures cannot be dismissed, as indicated by various analyses of current trends. While disinflation continues to show signs of progress, the report scheduled for Friday, May 31, is expected to reveal only marginal advancements in controlling inflation.
* The US economy continues to expand, according to the Fed’s Beige Book.
* A recent study by the San Francisco Fed suggests that extreme heat could hinder US growth.
* Persistent inflationary pressures are preventing the Federal Reserve from lowering interest rates.
* German inflation exceeds forecasts ahead of the ECB’s upcoming rate decision.
* The US 10-year yield has risen above 4.6% for the first time in over a month:
Following a challenging start to the year, African stocks have shown remarkable resilience, emerging as the best-performing region in the global stock market for 2024, as evidenced by various ETFs tracking international markets through the close on May 28.
* A strong earnings outlook is a key driver for stock market optimism.
* The IMF has raised China’s growth forecast to 5%, up from 4.6%.
* The US consumer confidence index increased in May, marking the first rise in four months.
* Low market volatility may be mispricing risk.
* Texas manufacturing activity dipped slightly in May.
* US home prices reached a new record high in March:
A comprehensive array of US economic indicators currently suggests a minimal risk of an NBER-defined recession occurring soon. This data challenges the prevailing negative narrative in certain sectors. Although there are some cautionary signs ahead, the evidence for anticipating significant downturns remains weak according to the latest figures.
* The US stock market was more concentrated in the 1950s and 1960s compared to today.
* Global debt is nearing 100% of global GDP, a level not seen since the Napoleonic Wars.
* The European Central Bank has indicated a likely interest rate cut on June 6.
* China poses a significant challenge in the West for achieving manufacturing parity.
* Fed’s Kashkari requests ‘many more months’ of reassuring inflation data before considering a rate cut.
* US durable goods orders have remained stagnant for a year through April:
“In our expressions of gratitude, let us not forget that the highest form of appreciation is not in words but in action.” — John F. Kennedy
● Shock Values: Prices and Inflation in American Democracy
Carola Binder
Interview with the author via Marketplace.org
The concept of “inflation” is currently a hot topic, shaping public perceptions of the economy. This remains true even as inflation rates have decreased from a peak of nearly 9% in June 2022, with recent figures showing a 3.4% annual increase. While it may seem that such concerns are novel, inflation has long been a central issue for Americans since the nation’s inception. One major change has been the government’s increased involvement in price stabilization, as explored in Binder’s book, “Shock Values: Prices and Inflation in American Democracy,” which examines the historical interplay between politics and inflation and the various governmental strategies employed, including fiscal measures like price controls and monetary policy.
While there has been unpredictability surrounding monetary policy, particularly regarding the timing of the initial rate cut, this situation is beginning to evolve. The Fed funds futures now reflect a slim possibility of a rate hike. It is crucial to note that the likelihood of an increase remains exceedingly low, at no more than 1%. Nevertheless, the fact that market sentiment is entertaining even a slight chance of a hike indicates a significant shift.
* Crude oil prices drop to their lowest point in over three months.
* China is implementing an ambitious plan to address its housing crisis, but it’s still insufficient.
* Sales of new single-family homes in the US declined more than anticipated in April.
* US jobless claims have decreased again last week, reinforcing a low layoff rate.
* The Chicago Fed National Activity Index weakened in April, yet…
* US business activity accelerated in May according to PMI survey data:
