In recent economic news, the Federal Open Market Committee has decided to maintain its current interest rate. However, other indicators suggest a slow start to the second quarter of 2024. According to John Beuerlein, Chief Economist at Pohlad Companies (parent company of Northmarq), disinflation trends and rising unemployment are contributing factors.
Beuerlein’s June 2024 report reveals that inflation increased in the first three months but showed improvement in April with a 0.3% increase in both headline and core readings of Consumer Price Index. Despite this progress, it remains above the Federal Reserve’s target of 2%. Beuerlein also notes that yearly inflation numbers may not see significant improvement until late 2024 unless monthly readings consistently stay below 0.2%.
The labor market is showing mixed signals as non-farm payrolls increased by an impressive number while unemployment rose to its highest level since January 2022 according to data from Household Survey provided by Beuerlein.
Consumer spending saw a slight increase in April but decreased when adjusted for inflation while real disposable personal income also declined slightly month over month leading many retailers such as Target and Walgreens cutting prices on various products due consumers’ aversion towards high prices.
Overall, these economic indicators point towards slower growth for GDP due consumer spending being less robust than previous years which will have an impact on retail sales across all income categories.
