Restrained inflation improves Americans’ moods early in the summer. Here are the five things we learned from U.S. economic data released during the week ending July 14.
Consumer inflation continued to moderate in June. The Bureau of Labor Statistics’ Consumer Price Index (CPI) grew a seasonally adjusted 0.2 percent, following a 0.1 percent gain in May. Energy PPI swelled 0.6 percent (gasoline: +1.0 percent), while food prices gained 0.1 percent (fruits & vegetables: +0.8 percent). Net of energy and food, core CPI was up 0.2 percent (its smallest gain since August 2021). Rising were prices for shelter (+0.4 percent), apparel (+0.3 percent), medical care commodities (+0.2 percent), and transportation services (+0.1 percent). Used car/truck prices fell 0.5 percent, while new vehicle prices held steady. CPI was up 3.0 percent from a year earlier, while core CPI’s 12-month comparable was +4.8 percent.
Wholesale prices modestly increased in June. The Producer Price Index (PPI) for final demand edged up a seasonally adjusted 0.1 percent following May’s 0.4 percent decline. The core PPI measure (which nets out food, energy, and trade services) also increased 0.1 percent after a flat May. Wholesale goods prices held steady, as a decline for food (-0.1 percent) and core goods (-0.2 percent) counterbalanced a 0.7 percent bump for energy. Final demand services PPI gained 0.2 percent. The Bureau of Labor Statistics notes that wholesale prices have grown by only 0.1 percent over the past year, while the core prices have risen 2.6 percent since June 2022.
Decelerating inflation fed improving consumer confidence in early July. The University of Michigan’s Index of Consumer Sentiment surged 8.2 points to a seasonally adjusted 72.6 (1966Q1=100). Not only was the preliminary July reading up 21.1 points from a year earlier, but it also was at its highest since September 2021. The current conditions rose 8.5 points to 77.5 (July 2022: 58.1) and the expectations index added 7.9 points to 69.4 (July 2022: 47.3). The press release attributed “the sharp rise in sentiment” to “the continued slowdown in inflation and with stability in labor markets.”
Small business owners, however, remains less than enthused. The National Federation of Independent Business’s Small Business Optimism Index added 1.6 points in June to a seasonally adjusted 91.0 (1986=100). While this was the index’s highest reading since last November, the measure has been below its 49-year average of 98.0. Five of ten index components improved during the month, including a significant surge in economic expectations. Three of the measures—current job openings, current inventories, and plans to increase inventories—declined. The press release noted that business owners were raising prices “to try to pass on higher inventory, labor, and energy costs.”
Consumers took on more credit card debt in May. Non-real estate backed consumer credit balances grew by 7.2 billion to a seasonally adjusted $4.865 trillion. The Federal Reserve data series was up 6.2 percent from a year earlier. Revolving credit balances—e.g., credit cards—expanded by $8.5 billion to $1.253 trillion (+12.9 percent versus May 2022). Narrowing were nonrevolving credit balances, which include college and auto loans. These balances decreased by $1.3 billion to $3.611 trillion (+4.1 percent versus May 2022).
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 8, 2023, First-Time Claims, seasonally adjusted): 237,000, -12,000 vs. the previous week, +16,000 vs. the same week a year earlier). 4-week moving average: 246,750 (+14.5% vs. the same week a year earlier).
- Import Prices (June 2023, All Imports, not seasonally adjusted): 0.2%. vs. May 2023; -6.1% vs. June 2022. Nonfuel Imports: -0.4% vs. May 2023; -1.4% vs. June 2022.
- Export Price (June 2023, All Exports, not seasonally adjusted): -0.9% vs. May 2023; -12.0% vs. June 2022. Nonagricultural Exports: -0.9% vs. May 2023; -12.4% vs. June 2022.
- Treasury Budget (June 2023, Federal Budget Deficit Over First 9 Months of FY2023): -$1.393 trillion (+270.4% vs. First 9 Months of FY2022).
- Beige Book
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What We Learned About the U.S. Economy Last Week 