The personal consumption expenditures price index, the Federal Reserve’s key inflation measure, increased just 0.1% for the month, putting the annual inflation rate at 2.1%. It went down from 2.6% on Dec 24 to 2.1%. This is a four-year low.
The Atlanta Fed GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 4.6 percent on June 2, up from 3.8 percent on May 30.
mmm...not bad.
Comments
Some know the price of everything, and the value of nothing.
Why are you bringing your politics to every post I made?
What about the cost to millions of relatively poor Americans that it took to get those numbers?
Let's talk about the entire picture.
https://mutualfundobserver.com/discuss/discussion/64060/economists-raise-questions-about-quality-of-u-s-inflation-data
despite january polls showing the gop expected inflation under trump to be 0%, there is a reason that (obviously retrospective) reports of inflation and recession (partly self-correcting) are disingenuous.
because the economic commitment was to bring DOWN prices by a lot for cars, houses, energy, eggs, etc...
the only way i see this promise kept is with major long duration recession and unemployment. if the fed has to cuts rates, this may prevent trump from touting low prices.
"When I win, I will immediately bring prices down, starting on day one. We will drill, baby, drill. That’s going to bring down prices of everything!" ~Donald Trump
"When I take office, I will swiftly reduce prices starting from day one." ~Donald Trump
The reality...
"Walmart and Target workers are sharing pics of price increases amid Trump’s trade war."
"I've been doing price change everyday for the past four months or so, and seeing everything going up all at once is really making me sad," said a Target worker in late May. "I just feel terrible putting all these ridiculously high prices up."
Inflation going down? Tell that to bond traders or the gold market. While the latter trades a lot on emotion and is very erratic, the trend can’t be mistaken. In both cases (bonds & metals) the trend signals higher, not lower, inflation.
5 years ago investors in the 10-year U.S. Treasury bond were demanding a rate of 0.60% to buy. Now, they’re demanding around 4.40%. That reflects what they think they need to earn from a “risk-free” (not really) investment to keep up with inflation over the next decade. Gold’s gone crazy. Over 5 years it’s risen from $1900 to $3400. And the FX is telling a similar story with a recent fall in the dollar. On this one, the numbers are too recent to define a trend - but my guess is there is an emerging longer-term trend (ominous for inflation).
I’d planned to cite some other commodities, but realized many were so distorted by the Covid period (like oil which got down to under $14) that they’re not worth citing. I won’t play politics. Neither side has an A+ on fighting inflation. And the issue is much more entrenched and complicated than what any one administration can solve. That’s not to argue the present one hasn’t made mistakes.
Are we discussing inflation from an investment perspective (longer-term outlook and how to invest to stay ahead?) or from a political perspective (Has Trump caused more or less inflation than Biden?) The second doesn’t much help me. But the first is very helpful to understanding what funds / assets to own and which ones to avoid.
From a 5-10 year investment perspective - with persistent or higher inflation
Cash? It’s OK. Rates should roughly approximate inflation over time.
Ultra-Short bond funds? Thumbs-up
Longer-dated bonds? Thumbs-down
1-3 year high quality bonds? Even-Steven. Probably OK. I own a slug of NEAR
Junk bonds? Dunno. Don’t play in that park. I’d say to buy them when no one wants them.
TIPS? Yes - With the qualification that they’re best directly held (not jerked around by fund flows). Randall Forsyth has a column in this week’s Barrons highly favorable. Read it.
Cash + bond alternatives (like CVSIX, GDL, LPXAX)? Decent. Worth consideration.
Precious metals? No way at my age. Pretty to look at. But too volatile & risky.
Commodities / “real asset” funds? Yes. But only in moderation. Very cyclical.
“Systematic” multi-asset approaches? - Worth holding as a diversifier. I own BAMBX.
Equities? Depends which ones. I like broadly diversified / balanced funds with an international tilt.
RPSIX? You have to be kidding. Look at its 10-year performance - and with a healthy slug of equities.
Hmmm, wonder if rono is selling any here.
Pretty much expected. It's another preemptive attempt in the future to claim that good data is wrong.
... and Walmart.