Quick update on the data. First, the retail sales report reveals that the consumer rebounded solidly from a first quarter slowdown:
Never, never, never underestimate the U.S. consumer’s willingness to spend! As long as they have the means to spend, they will do so. And today’s weekly read on the labor market doesn’t provide any hints this will be a problem anytime soon:
With the job market still chugging away like the Energizer Bunny, consumers will continue to have the means to support spending. In the meantime, CPI firmed in May but isn’t setting off alarm bells as core inflation remains low, easing back from a jump earlier in the year:
Interestingly, shelter inflation re-accelerated in the past few months, which is something to keep an eye on:
Altogether, no reason to think the Fed will pause at the September meeting. Baseline is that they keeping grind away with 25 basis point hikes each quarter.
Finally, shameless self-promotion: