Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)May Israel achieve the safety, security and peace of mind by destroying the means and personnel that threaten their existence and may many in Iran who have been yearning for freedom for decades from the repressive regime finally get a chance to live it.

2)May CPI rose one tenth both headline and core, below the estimates of up .2% and .3%. The y/o/y gains of 2.4% and 2.8% compare with 2.3% and 2.8% in the month before. Helping to calm the headline figure was the 1% fall in energy prices m/o/m and down 3.5% y/o/y, mostly due to lower gasoline prices, while food prices were up by .3% m/o/m and by 2.9% y/o/y. Prices for ‘food at home’ were up by .3% m/o/m after falling by .4% last month and higher by 2.2% y/o/y. ‘Food away from home’ is where more of the food inflation is taking place as prices here were up by .3% m/o/m and 3.8% y/o/y. Services prices ex energy were up by .2% m/o/m and 3.6% y/o/y. Core goods prices were flat m/o/m and up a slight .3% y/o/y.

3)May PPI was higher by one tenth for both headline and core vs the estimate of up .2% and .3% respectively but it was fully offset by the upward revisions to April. April headline was revised up by 3 tenths to -.2% while the core rate was revised up by 2 tenths to also down .2% m/o/m. The y/o/y gain of 2.6% and 3% for both headline and core compare with 2.5% and 3.2% in the month before. Food prices were up by 1 tenth m/o/m and 3.5% y/o/y. Energy prices were flat vs April but down 4.4% y/o/y. Core goods prices rose .2% m/o/m and have been rising consistently by 2 or 3 tenths per month this year and are higher by 2.4% y/o/y. With services, prices rose by one tenth but still up 3.2% y/o/y.

4)The May NFIB Small Business Optimism index rebounded by 3 pts to 98.8 after four months of declines. Of note, taxes are now the number one small business problem at 18% and the last time this was the case was in December 2020. Labor quality is number two at 16% and inflation is 3^rd at 14%. Also, "When asked to rate the overall health of their business, 14% reported excellent (up one point), and 55% reported good (down one point). Twenty-eight percent reported the health of their business was fair (up one point) and 4% reported poor (unchanged)." The bottom line from Bill Dunkelberg, "Although optimism recovered slightly in May, uncertainty is still high among small business owners. While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth."

5)The preliminary June UoM consumer confidence index jumped to 60.5 from 52.2 in May and April, 57 in March, 64.7 in February and 71.7 in January. Current Conditions rose to 63.7 from 58.9 while Expectations were up to 58.4 from 47.9. After going from 4.3% to 6.6% over the prior three months, one yr inflation expectations slipped back to 5.1%. The longer term 5-10 yr guess was 4.1% after peaking at 4.4% in April. Expectations for the jobs market bounced after the recent weakness. Expectations for business lifted too with the "perceived easing of pressures from tariffs." With the lift in confidence, spending intentions rose too for autos, homes, and major household items. Bottom line from the UoM, "Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed. However, consumers still perceive wide ranging downside risks to the economy. Their views of business conditions, personal finances, buying conditions for big ticket items, labor markets, and stock markets all remain well below six months ago in December 2024. Despite this month's notable improvement, consumers remain guarded and concerned about the trajectory of the economy."