Nobody is happy, but Americans are feeling more optimistic.
Last week, headlines blasted the new inflation numbers. Prices were up more than 9% year-over-year in June, according to the Bureau of Labor Statistic’s Consumer Price Index (CPI). When you dig into the numbers, energy prices were up 41.6 percent year-over-year and food prices were up 10.4 percent.
“Prices are rising just about everywhere in the world, in part a consequence of Russia’s invasion of Ukraine, which has elevated energy and food prices, and in part because of the supply chain bottlenecks that have driven U.S. prices up,” reported Paul Wiseman of U.S. News & World Report.
The U.S. inflation numbers caused markets to tumble early in the week as investors speculated about whether the Federal Reserve would decide to raise the federal funds rate at a faster pace at its next meeting, reported Ben Levisohn of Barron’s.
Then the retail sales and consumer sentiment data arrived.
After adjusting for inflation, retail sales slowed in June, just as they had in May, reported Megan Cassella of Barron’s. Retail sales data are a leading indicator, meaning they provide information about what may be ahead, while the CPI is a lagging indicator that provides information about what has already happened. Slower retail sales suggest demand is falling and lower prices may be ahead. The news cooled some investors’ rate-hike concerns.
On Friday, the University of Michigan’s Consumer Sentiment Survey showed a modest improvement. Barron’s reported, “…consumer sentiment that had hit an all-time low in June improved slightly in July, likely a reflection of the recent fall in gas prices. And long-term inflation expectations dropped modestly over the month as well. Together, the latest data shows early signs that the Federal Reserve is making progress in its quest to cool the economy.”
Last week, Barron’s reported that major U.S. stock indices declined. Yields on shorter maturity Treasuries rose last week, while yields on longer maturity Treasuries fell.
https://www.barrons.com/articles/stock-market-had-finished-up-on-friday-its-still-a-bear-market-51657929639?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/07-18-22_Barrons_Dont%20Get%20Your%20Hopes%20Up%20Stocks%20Are%20Still%20in%20a%20Bear%20Market_3.pdf)
https://www.barrons.com/articles/retail-sales-michigan-consumer-sentiment-report-economy-51657878999 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2022/07-18-22_Barrons_Retail%20Sales%20Actually%20Slowed%20Down%20What%20It%20Means%20for%20the%20Fed_4.pdf)
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