This past week was another consequential as a number of important reports were released. Taken together, they show an economy that is still relatively strong despite inflation taking a turn for the worse. Let’s look at what the data says about the economy, how it impacts monetary policy and how it might impact your wallet going forward.
On Tuesday, CPI data for the month of April was released. Core CPI was up 0.4 percent over the past month compared to an expected increase of 0.3 percent. Overall CPI was up 0.6 percent, which was in line with expectations. On an annualized basis, inflation was 3.8 percent in April, compared to 3.3 percent a month ago. The increase in oil prices is largely to blame for the acceleration with Americans paying an average of $4.52 for a gallon of gas.
On Wednesday, the Price Producer Index (PPI) for April was released. It revealed that core PPI was up about 1 percent compared to an expected increase of 0.3 percent. Overall PPI was up 1.4 percent compared to an expected increase of 0.5 percent. March figures were revised upward to 0.2 percent and 0.7 percent respectively. It’s possible that price increases for April may have been understated and that consumers may face more pressure on their wallets moving forward.
Also on Wednesday, Fed Chair Kevin Warsh was officially voted in as the new leader of the Federal Reserve. He replaces Jerome Powell who served in that role since 2017. Powell will remain with the Fed, which is the first time in roughly 75 years that a Fed Chair has remained with the organization upon stepping down from the position.
Thursday, retail sale and unemployment data were made public. Core retail sales were up 0.7 percent while overall retail sales were up 0.5 percent. Each of these figures were in line with analyst expectations prior to their release. There were 211,000 claims for unemployment benefits over the last seven days compared to an expected 205,000 and 199,000 confirmed claims from a week ago.
The S&P 500 eked out a slight gain this week finishing up 2.31 points to close at 7,408. This was a gain of just .03 percent for an index that has now finished in the green for seven straight weeks. The index made its high of the week on Thursday when it hit 7513. On Tuesday, it hit a low of 7,344.
The Dow was down slightly this week closing off .01 percent to finish the week at 49,526. The index spent some time above the 50,000 level, which has been both politically and physiologically significant for multiple months now. On Thursday, the market made a high of 50,174 before reversing. On Tuesday, the market bottomed out at 49,394.
As with the other two indexes, the Nasdaq was little changed this week. However, it was still the winner of the week finishing a robust .09 percent higher to close at 26,225. It made a high of 26,689 on Thursday after reversing from the weekly low of 25,810 made on Tuesday.
The price of West Texas Intermediate (WTI) oil came close to $105 this week, which puts it just a few dollars from its yearly high of just over $110. The key level to watch is $100 a barrel as that equates to gas prices of about $4 a gallon.
Next week is going to be another interesting one as there is sure to be continued fallout from events in Iran. There will be some intriguing data points coming out next week such as home sale data as well as the revised consumer sentiment report from the University of Michigan. However, the truly consequential information comes out on Wednesday as the FOMC releases the minutes from the April meeting.