Inflation and the Fed decision show it was a good week for the economy

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It was a great week for the economy

Americans are feeling good about the state of the economy heading into the summer as gas prices fall andin other categories. As a result, plenty of Americans are still shopping, which means businesses can continue to hire. That's reflected in low unemployment and strong job growth at a time when hourly wages finally caught up to inflation.

Core CPI, which excludes food and energy, increased 5.3% in May from a year earlier, which suggests consumers are still feeling the weight of somewhat easing price pressures. This included a 4.4% jump in used vehicle prices and a 0.6% increase in shelter prices, up from 0.4% for April 2023.. In May, grocery inflation on a three-month annualized basis fell 1.7%, a stark difference from the 15.7% rise in July 2022. This was driven in part by rapidly falling egg prices, which decreased 13.

"We have been seeing the effects of our policy tightening and demand in the most interest-rate-sensitive sectors of the economy, especially housing and investment," said Fed Chair Jerome Powell."It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation."

 

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