Rising Prices, Plummeting Sentiment: June 6 – 10

Inflation hit a four-decade high in May. Here are the five things we learned from U.S. economic data released during the week ending June 10. 


Food and energy fueled another surge in consumer prices. The Bureau of Labor Statistics’ Consumer Price Index (CPI) rose by a seasonally adjusted 1.0 percent in May after a 0.3 percent increase during the prior month. Energy rebounded after a brief April respite, jumping 3.9 percent during the month (gasoline: +4.1 percent). Food CPI jumped 1.2 percent, including a 1.4 percent gain for “food at home.” Net of energy and food, core CPI rose 0.6 percent, which matched April’s increase. Prices grew for used cars/trucks (+1.8 percent), transportation services (+1.3 percent), apparel (+0.7 percent), shelter (+0.6 percent), and medical care services (+0.4 percent) and commodities (+0.3 percent). Consumer prices have risen 8.6 percent over the past year (its fastest increase since 1981), while core CPI jumped 6.0 percent over the same 12 months.  

Consumer confidence fell further in early June. The Index of Consumer Sentiment shed 8.2 points in the preliminary June report to a seasonally adjusted 50.2 (1966Q1=100). This was the lowest reading ever for the University of Michigan measure (launched in the 1940s) and represented a 41.3 percent drop from a year earlier. The current conditions index plummeted by 7.9 points to 55.4 (June 2021: 88.6), while the expectations index slumped by 8.4 points to 46.8 (June 2021: 83.5). Nearly half of the survey respondents linked the malaise to inflation. The press release noted, “[h]alf all consumers spontaneously mentioned gas during their interviews.”

Rising exports and a sharp drop in imports led to a narrower trade deficit in April. The Census Bureau and the Bureau of Economic Analysis report that exports rose 3.5 percent during the month to a seasonally adjusted $252.6 billion and imports slowed 3.4 percent to $339.7 billion. The resulting trade deficit of -$87.1 billion was down 19.1 percent from March and the smallest reading since last December. The goods deficit shrank by $19.1 billion to -$107.7 billion, while the services surplus swelled by $1.5 billion to +$20.7 billion. The former reflected sharp drops in imported consumer goods, industrial supplies, and computers, and sizable increases for exported energy goods, soybeans, and civilian aircraft. The U.S. had its largest goods deficits with China (which fell sharply due to COVID-related manufacturing shutdowns), the European Union, Mexico, and Vietnam.

Wholesale inventories expanded in April. The Census Bureau estimates merchant wholesalers’ inventories rose 2.2 percent during the month to a seasonally adjusted $861.8 billion. This was up 24.0 percent from a year earlier. Durable goods inventories increased 2.0 percent in April to $517.9 billion, while those for nondurables jumped 2.4 percent to $344.2 billion. Wholesaler sales gained 0.7 percent during the month to a seasonally adjusted $691.6 billion (+20.9 percent versus April 2021). The resulting inventory-to-sales (I/S) ratio of 1.25 was up two basis points from March and four basis points from a year earlier. The durable goods I/S ratio added three basis points to 1.60 (April 2021: 1.48) and the nondurable ratio advanced by two basis points to 0.94 (April 2021: 0.96). 

Americans took on more debt in April. Outstanding consumer credit balances (net of mortgages) swelled by $38.1 billion to a seasonally adjusted $4.567 trillion. This was the third straight monthly increase of at least $30 billion for the Federal Reserve data series, which also found balances have risen 7.5 percent over the past year. Revolving credit balances, including credit cards, increased by $17.8 billion to $1.103 trillion (+13.1 percent versus April 2021). Nonrevolving credit balances, including auto and college loans, grew from $20.3 billion to $4.464 trillion (up 5.8 percent from April 2021). 

Other U.S. economic data released over the past week:

Jobless Claims (Week ending June 4, 2022, First-Time Claims, seasonally adjusted): 229,000, +27,000 vs. the previous week, -191,000 vs. the same week a year earlier). 4-week moving average: 215,000 (-51.0% vs. the same week a year earlier). 

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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