Solid As Solid Report Consumer Expenditures; Tighter core inflation
US consumer expenditures increased with solid in July while underlying inflation increased as tariffs on imports raising the prices of several items, but the data might not prevent the federal reserve from cutting interest rates next month with the background of the softening of the labor market conditions.
Consumer expenditure, which contributed more than two -thirds of economic activities, up 0.5% last month after the 0.4% increase was revised upward in June, the Department of Trade’s Economic Analysis Bureau said on Friday. Economists surveyed by Reuters have estimated expenses to increase 0.5% after previously reporting 0.3% progress in June.
Consumption is being supported by low layoffs that support solid wage growth. But President Donald Trump’s import tariff to increase costs for business, adding a layer of other caution which resulted in entrepreneurs to be reluctant to increase the number of employees.
The advantage of work has an average of 35,000 work per month over the past three months until July compared to 123,000 during the same period in 2024, the government reported this month.
A survey from the conference council on Tuesday shows the share of consumers who see work as “difficult to get” soaring to the highest 4-1/2 years in August. Chairman of Fed Jerome Powell last week hinted the possibility of slaughtering interest rates at the US Central Bank 16-17 September, with a nod to increase the risk of the labor market, but also added that inflation remained a threat.
The Fed has maintained the benchmark of the interest rate last night in the range of 4.25% -4.50% since December. High prices from slow import duties to feed up to inflation because the business still sells stocks that accumulate before the tariff is kicked. Business has also absorbed some costs.
Economists hope that the situation will soon change. There is an inventory withdrawal in the second quarter. Companies from retailers to motor vehicle producers have warned that the tariff increases their costs, which are expected by economists will eventually be forwarded to consumers.
The Personal Consumption Expenditure Price Index (PCE) increased 0.2% last month after the 0.3% increase that had not been revised in June, said Da. Within 12 months to July, the PCE price index rose 2.6%, matching the increase in June.
Not including volatile food and energy components, PCE price index increased 0.3% last month, matching the increase in June. Within 12 months to July, what is called the core inflation rate rose 2.9% after an increase of 2.8% in June.
The Fed tracks PCE prices for 2%inflation targets.
Source: Reuters
