US Monthly Economic Indicators (Through May 2024) US core consumer price inflation rate (excluding food and energy) is trending at 3.1% annualized and decelerating. Same is true of the Fed's favorite metric, core personal consumption expenditures price inflation rate, trending at 2.6% and decelerating. Producer price inflation is trending at 2.3%. Average hourly earnings change is trending at 4.1% annualized, which means that workers are finally beating inflation. Unemployment rate trend remains very low at 3.9%. On the activity side, Industrial Production (real) is trending up and Retail Sales (nominal) are relatively flat, while Housing Starts are trending down. The Fed has not noticeably loosened but money supply M2 is trending slightly up. Two-year and ten-year Treasury yields are still fairly steady and slightly inverted. Conference Board's Leading Economic Index fell again in May. Have we skirted a real downturn? A Simple Macro Model suggests that we have, although the first quarter came in soft and our model suggests another soft quarter before resumption of trend growth. Interestingly, we had a technical recession (two negative GDP growth quarters) during the first half of 2022 when the fed jacked up interest rates, although the NBER failed to catalog it as the real thing. Hence the much anticipated recession may have already occurred when the Fed first reversed course away from unending easy money.
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