It’s Friday and that means it’s time to review the latest economic data and identify which pockets of the economy are heating up and which are slowing down. Don’t worry about catching every headline and every report throughout the week—I recap all of the most important news impacting your wealth right here every Friday. Let’s take a look at this week’s big headlines…
FOMC Meeting Announcement
On Wednesday, the Federal Open Market Committee (FOMC) raised the benchmark interest rate by 25 basis points to a range of 1.75% to 2.00%. This is the second time this year that the nation’s central bank has raised key interest rates. The Fed also suggested that there would be further rate hikes in 2018. The Fed is now forecasting a total of four rate hikes, which would imply another two increases this year. Then again, the Fed doesn’t have the best track record in following through with its predictions, so we’ll have to wait and see.
Consumer Price Index (CPI)
On Tuesday, Labor Department announced that the Consumer Price Index (CPI) rose 0.2% in May. The main culprits were rising gasoline prices, as well as higher costs for medical care and housing. Excluding food and energy, the core CPI also jumped 0.2% in May. The CPI is now running at a 2.8% annual pace, up from a 2.5% annual pace in April. To put this into perspective, this is the fastest rate since 2012. Meanwhile, the core CPI is now running at a 2.2% annual pace in the past 12 months. So inflation at both the wholesale and consumer level is clearly heating up.
The Commerce Department announced that retail sales jumped 0.8% in May. Not only did this beat economists’ expectations of a 0.4% increase, it represents the largest monthly gain in retail sales in six months. Excluding the sales of automobiles, gasoline, building materials and food services, core retail sales rose 0.5%. April’s core retail sales were revised higher to reflect a 0.6% gain. Within the past year, retail sales have jumped 5.9%. All-in-all, this was a strong report, and it suggests that the U.S. economy is gaining real momentum.
Business inventories in the U.S. rose in April, gaining 0.3%. This was in line with economists’ expectations. March inventories were also revised to reflect a 0.1% decline, down from a previously reported 0.0%. At the same time, April sales at businesses increased 0.4 % over March; over the past twelve months, sales have risen 6.7%. At the current sales pace, wholesalers have enough in inventory to last 1.35 months.
That’s all I have for you this week. I’ll be in touch again next week with the latest ratings out of Portfolio Grader.
Until next week,