economy remains durable for now, Europe’s largest economy, Germany, has fallen into a downturn. And job openings, though declining, are still well above pre-pandemic levels. The pace of layoffs remains comparatively low. In April, employers added 253,000 jobs, and the unemployment rate matched a 54-year low. Most significantly, the nation’s job market remains fundamentally solid. credit and likely trigger a recession deeper and sooner than the one that is already expected.įor now, though, most sectors of the economy other than housing are showing surprising resilience. Economists say a protracted debt default would cause downgrades of U.S. That would leave the Treasury unable for the first time to pay all its bills on time. There is also the looming risk that House Republicans will refuse to raise the statutory limit on what the government can borrow, if President Joe Biden and the Democrats don’t agree to sharp spending cuts. In addition to higher borrowing rates, the economy’s other obstacles include a cutback in lending as banks conserve cash after three big bank failures in recent months. The economy’s slowdown is widely expected to lead to a recession later this year. Still, consumer prices were still up 4.9% in April from a year earlier - well above the Fed’s 2% target.
In April, sales of existing homes were 23% below their level a year earlier.Īs the Fed’s rate hikes have gradually slowed growth, inflation has eased from the four-decade high it reached last year. That report is expected to show a 0.3% headline increase and a 0.2% core gain.With mortgage rates having doubled over the past year, the real estate market has already taken a beating: Investment in housing fell at a 0.2% annual rate from January through March. The Labor Department on Thursday will release the April producer price index, a gauge of wholesale prices on final demand goods and services. In approving its latest rate hike last week, the Fed removed an indication that future increases are warranted and instead shifted to language saying that decisions will be based on incoming data. The CPI reading comes just days after the BLS reported that nonfarm payrolls increased by 253,000 in April, above expectations and indicative that the labor market is still hot despite Fed efforts to cool demand. Egg prices, one of the biggest gainers in the food index over the past year, fell 1.5%, taking the annual gain down to 21.4%.įor workers, real average hourly earnings, adjusted for inflation, rose 0.1% for the month but were still down 0.5% from a year ago, the BLS said in a separate report.įollowing the reports, traders lowered the odds that the Fed would raise interest rates at the June meeting to 20%, according to the CME Group's FedWatch tracker of pricing in the fed funds futures market. Milk, for instance, fell 2%, the biggest monthly drop since February 2015. Of the six grocery store indexes the Bureau of Labor Statistics uses to compute food prices, four showed declines. Food prices, though, were flat while the energy index rose 0.6%, boosted by a 3% gain in gasoline. The monthly gain was slightly higher than the 0.3% in March while the annual pace was unchanged.Īt the same time, the 4.4% jump in prices for used cars and trucks reverses recent declines. That measure rose 0.4% for April and was up 3.7% from a year ago. With housing costs projected to decline, the Fed is focusing on "super core" inflation, which excludes food, energy and shelter.
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The monthly gain represented a step down from previous months' increases but was still indicative that a key inflation driver is rising. Shelter costs, which make up about one-third of the CPI weighting, increased another 0.4% on the month and are now up 8.1% from a year ago. The report provides both good and bad news on the inflation front as Fed officials weigh their next move on rates. However, inflation still has held well above the Fed's 2% annual target. The CPI reading has cooled considerably since peaking out around 9% in June 2022. Starting in March 2022, the central bank has enacted 10 consecutive interest rate increases totaling 5 percentage points, taking benchmark borrowing rates to their highest level in nearly 16 years. Inflation has been persistent despite the Federal Reserve's efforts to bring down prices. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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