2008-05-30 Data Recap

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Karim writes:

 
• Core pce up 0.1% m/m and unch at 2.1% y/y (recent high 2.5% in 2/07; recent low 1.9% in 9/07); 3mth annualized rate back to 1.9%

Yes, the Fed welcomes this but is concerned about its forecasts given food/energy/import/export prices and pipeline pressures.

 
• Headline rises from 3.1% to 3.2%

And likely to go up from here.

 
• Personal income up 0.2% m/m; wage and salary component posts decline of 0.2%; likely reflecting end of seasonal bonuses in Q1

Yes, but sufficient to keep consumption muddling through and not collapse as the Fed had feared.

 
• Chicago PMI rebounds from 48.3 to 49.1

Still weak, but yet another sign the worst may be over.

 
• Final Michigan reading largely unch but 5-10yr infl expex up a tick from 3.3% to 3.4%

Yes, and very troubling for the FOMC. There have been numerous strong statements regarding the imperative of not letting inflation expectations elevate.

 
• All add up to ISM likely holding below 50 next week; payrolls down another 50-75k and ue rate back up to 5.1% or 5.2% for May

Yes, weak, but not recession, and strong enough to support the stock markets and ever higher consumer prices.

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