Treasury
Inflation accelerates upward, eroding residents' income and savings, with consumer spending growth slowing
U.S. inflation accelerated to 3.8% in April, outpacing income growth, leading to a decline in real income, weak consumer spending, and the savings rate falling to its lowest since 2022. Federal Reserve officials hinted at possibly abandoning the easing bias and even considering rate hikes.
Consumer confidence declines, most households cut spending due to inflation
A survey released Tuesday by The Conference Board showed the consumer confidence index fell 0.7 points to 93.1 in May, as rising prices for goods such as gasoline led two-thirds of households to cut spending. A University of Michigan survey also showed consumer sentiment at a historic low.
Consumer confidence hits historic low, cost of living becomes 'top concern'
Survey data released by the University of Michigan on Friday showed that U.S. consumer confidence fell to a historic low this month, with soaring gasoline prices being the main driver. Long-term inflation expectations rose by 0.5 percentage points to 3.9%. 57% of consumers spontaneously mentioned that high prices are eroding their financial situations. Federal Reserve Governor Waller stated that 'inflation is not moving in the right direction,' hinting that a future interest rate hike cannot be ruled out. Interest rate futures markets show the probability of a rate hike within the year has risen to 64%.
S&P Global: Economic damage from Iran war 'increasingly evident'
The latest S&P Global survey shows that inflationary pressures from the Iran war are dragging on U.S. economic growth, employment, and business confidence. The May composite purchasing managers' index showed sluggish growth for a second consecutive month, with services sector optimism dropping to its lowest since April 2025. Federal Reserve officials have hinted that rate hikes may be needed to curb inflation, and market expectations for rate increases this year have risen.
Fed Survey: American Households' Economic Outlook Turns Pessimistic
The Fed's latest annual survey reveals that although 73% of American adults report their financial situation as okay or comfortable, overall views on the economy have darkened, with 42% of respondents worried about job prospects and over 90% citing inflation as the most common financial concern. The survey also found that financial well-being has significantly declined among low-income, younger, and Black groups, while energy price increases triggered by Middle East conflicts are further dragging down growth expectations.
Retail sales growth slows to 0.5%, inflation erodes purchasing power
U.S. retail sales rose 0.5% month-over-month in April, a notable slowdown from March's 1.6%, with a year-over-year increase of 4.9%. High inflation has caused real wage growth to lag behind prices, dampening consumer confidence, and retail sales may face further pressure in the coming months.
War-induced supply shortages push producer price index to three-year high
Data from the U.S. Bureau of Labor Statistics shows that the Producer Price Index rose 1.4% month-over-month and 6% year-over-year in April, the largest annual increase since December 2022. The Iran war pushed up oil prices, with transportation and warehousing costs rising 5% and wholesale energy prices surging 7.8%. Boston Fed President Collins warned that supply disruptions may persist, and inflationary pressures may require policy responses.
Energy prices push inflation to 3.8% three-year high, outpacing wage growth
Data from the U.S. Bureau of Labor Statistics shows that the March consumer price index rose 3.8% year-on-year, hitting a three-year high, with energy prices surging 17.9% as the main driver, outpacing average hourly wage growth. Core CPI rose 2.8%, and food prices rose 3.2% year-on-year. Market expectations for Fed rate cuts within the year have significantly cooled, with some economists suggesting the possibility of rate hikes.
NABE Survey: Iran War Drives Up Inflation, Squeezes Corporate Profits, and Curbs Investment and Hiring Plans
A survey released Monday by the National Association for Business Economics (NABE) shows that inflation triggered by the Iran war is raising corporate costs, squeezing profits, and prompting companies to scale back investment and hiring plans. The survey found that 48% of respondent firms reported business damage, 44% reported higher input costs, and 24% planned to lower investment and hiring expectations. Additionally, economists' concerns about recession risks have increased, though most believe that rising energy prices will not exert sustained pressure on core inflation.
U.S. April nonfarm payrolls add 115,000, beating expectations, showing resilience amid Iran war and tariff pressures
U.S. April nonfarm payrolls added 115,000, exceeding expectations, with the unemployment rate holding at 4.3%. Despite high tariffs and soaring oil prices caused by the Iran war, the job market remains resilient. Chicago Fed President Goolsbee said the job market shows no signs of collapse, but inflationary pressures still require vigilance.