Chilly Week in Review

Inflation, spending, & more

Despite the heat dome that has brought sweltering temperatures to much of the country, economic data continues to come in cooler than expected (both in good and bad ways). Today’s review covers some housing stats, consumer and CFO confidence, income, inflation, and spending data, and a lot more.

If you missed it yesterday, be sure to check our dueling takes on whether or not the Fed is too late.

Monday

Existing Home Sales

Sales of existing homes (i.e., not newly built) inched slightly higher in May but are down about 1% over the past year and 37% from the peak in late 2022. The housing market continues to struggle.

Baker Hughes Rig Count

The number of active U.S. oil rigs fell slightly during the week ending June 20^th (and are still down about 10% year over year). Despite everything that happened in the Middle East over the past week, oil prices are back down to the mid-$60s. Don’t expect rig counts to rise meaningfully anytime soon.

Gas Prices & Diesel Prices

Gas prices jumped to $3.34/gallon this week, which is a $0.10/gallon increase from two weeks ago. Gas is still pretty cheap, with prices considerably lower than one year ago.

Diesel prices surged $0.21/gallon higher though, and are up to their highest level since last August. That won’t help with goods inflation.

TSA Checkpoint Travel Numbers

The summer travel season improved a little this past week and is almost keeping pace with year-ago levels, according to TSA travel data. Consumers (at least the ones who fly around during the summer) are hanging in there.

Tuesday

Conference Board Consumer Confidence Index

Consumer confidence fell in June, with tariffs remaining top of mind for many. Notably, the largest decline in confidence was among Republicans (confidence is far less likely to fall for the party holding the White House…).

The most concerning aspect of this report is that consumers are increasingly pessimistic about how hard it is to find jobs.

Home Prices

The S&P Case-Shiller Home Price Index rose 0.6% in April and is up about 3% over the past year. But that’s April, and the housing market has struggled mightily in May and June. The change in the median sale price (a slightly different measure) is up just 0.7% year over year, according to Redfin.

Speech by KC Fed President

Jeffrey Schmid succinctly explained why the effects of tariffs are so difficult to predict:

“The pricing of each tariffed product is determined by the action and interaction of many different actors, from the foreign producer to the domestic importer, to the domestic supply chain and the retailers that ultimately deliver that product to the consumer. Which of these actors bears the cost of the tariff will be determined by a complex chain of negotiations that importantly will be affected by the availability and costs of substitutes along the entire path to the final consumer. This chain of interactions will vary for each product. Hence, it is almost impossible to anticipate exactly what the effect of tariffs will be on final consumption prices. Considering the additional complication that these decisions are likely to be dynamic and change over time, it becomes apparent that it is not only hard to know how prices will change but also when prices might change.”

Wednesday

CFO Optimism Index