Week in Review: June 13-17

Retail sales down, rates up, outlook down

First, don’t read this if you’ve just had coffee or are a Golden State Warriors fan. You need to be calm. Buckle up, Buttercup, because this week was wild!

Monday

Market Mayhem

Financial markets plummeted due to rumors that the Fed would raise the Federal Funds rate by 75-basis points. (If you need a refresher on what that means, see our Very Basic Primer on Interest Rates). For those of you who are single, if you go to a bar tonight and utter the words “75 basis points,” you won’t go home alone.

Just a few weeks ago, Federal Reserve Chairman and lawyer Jerome Powell said that a 75-basis point increase was “not something that the committee is actively considering.”  We now know otherwise (more on that below). Does that feel like policymaker panic? Investors thought so, with equity markets tanking and crypto crumbling—Bitcoin fell about $4,100 or 15% on Monday.

Tuesday

Producer Price Index

The Producer Price Index (PPI) measures the change in the prices received by U.S. producers for their output. To absolutely no one’s surprise, we’re still seeing really sharp inflation at every level of the economy. Based on the PPI, overall final demand prices rose 0.8% in May after rising 0.4% in April. Over the past year, producer prices are up 10.8%, so if you meet that special new friend tonight, you can also point out that there is a case to be made that America is experiencing double-digit inflation. That and some Luther Vandross in the background could . . .

NFIB Small Business Optimism Index

Small business optimism regarding the future fell to its lowest level in 48 years, as inflation and labor market tightness weighed on our nation’s intrepid business owners. A majority of owners still plan to increase hiring over the next three months, however, suggesting that their outlook isn’t as grim as they themselves suggest. If circumstances were truly dire, you’d think small business owners would not be looking to expand their respective wage bills.

Wednesday

Retail Sales