Markets Stabilize As Inflation Comes In Flat

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Inflation fears pushed equities lower last week, but inflation data released on Friday seemed to ease investors somewhat.  The PCE Price Index for April showed that inflation was flat on both a month-over-month and a year-over-year basis.  After inching higher in February and March, April's inflation was 0.3%, as expected.  The current odds of a rate cut by the Fed show the strongest possibility now of happening in November.  September has been considered the launch point for rate cuts, but the futures show only a 50:50 possibility of a rate cut in September, at best.

The Weekly Economic Index, created by Daniel Lewis, Karel Mertens, and James Stock, tracks the 10 different daily and weekly series covering consumer behavior, the labor market, and economic production.  The Index currently stands at 2.21, which is the highest level since the beginning of the year.  This does not indicate a economy that is slowing down considerably.  The Redbook Sales numbers showed growth of +6.3% on a year-over-year basis.  If we compare that to 2022, a year in which Redbook Sales declined, those figures have steadily improved throughout 2024, indicating that the U.S. consumer is still spending.  This week we'll get the Jobs Report, which will let us know whether or not consumers can expect to have money in the wallet for future spending.

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