WASHINGTON–Wages, prices and consumer spending all increased over the year ending in June, according to new government data, creating a challenge for economists and the Fed as they seek to interpret what all the numbers mean and how to best move forward.
“The latest government data…showed evidence that the economy remains resilient amid fear of a recession, but also that inflation is likely to remain a vexing problem for the Federal Reserve,” noted the New York Times in its analysis.
As CUToday.info reported, the new data show consumer prices were up 6.8% through June, according to Personal Consumption Expenditures measure. That was the fastest pace since 1982, the government said.
Yet as quickly as prices have increased, consumer spending rose even faster, the data reveal.
Meanwhile, take-home pay has also grown quickly, although at a slower pace than inflation, with the Employment Cost Index for the second quarter rising 5.1% from a year earlier.
A Paradox
“Taken together, the data released Friday indicated that the consumer economy has retained momentum in the face of the highest inflation in decades,” the Times stated. “That should ease concerns that an economic downturn has already begun but, paradoxically, could also make future economic pain more likely: Strong demand will put continued upward pressure on prices, potentially forcing the Fed to react more aggressively to cool demand and bring inflation under control.”
The Fed has said it is closely watching incoming economic readings as it considers whether to again raise rates at its next meeting in September.
‘Up at Night’
“This is a print that’s going to keep Fed officials up at night,” Omair Sharif, founder of Inflation Insights, wrote in reaction to the fresh wage data, according to the Times. “The monthly inflation and activity data are going to have to cooperate in a very big way for the Fed to step down.”
The Very Best in CU Reporting. For You. For Free. Or Your Money Back.
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com