A big change could come in the economy in September

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Americans looking for relief from high loan rates don’t have to wait much longer.

US consumer prices fell in June For the first time since the early months of the epidemic. New data showed Thursday that consumer prices fell 0.1% from May. On an annual basis, inflation eased to 3% last month from 3.3% in May.

A welcome slowdown in inflation has led investors to raise bets on when the Federal Reserve might start cutting interest rates. Wall Street’s expectations for a September cut rose to around 93% from 73% on Thursday, according to the CME FedWatch tool.

„The September rate cut should be a done deal at this point,” Lazard’s chief market strategist Ron Temple wrote in a Thursday note.

BNP Paribas economists on Thursday updated their baseline case to reflect a rate cut in September, citing a mix of June inflation and jobs data. They are Expect two quarter-point cuts in 2024.

The central bank has a dual mandate: keep prices stable and unemployment levels low. The central bank began raising interest rates in 2022 to curb inflation and has held them steady at current 23-year highs since last July.

Thursday’s data, combined with a chilly but resilient labor market, was an encouraging sign that the central bank could fulfill its dual mandate and begin easing sky-high rates in September. American economy It added 206,000 jobs in JuneThat’s below the downwardly revised figure of 215,000 jobs in May, and the unemployment rate rose to 4% for the first time since November 2021. New applications for unemployment benefits have also risen in recent weeks.

Federal Reserve Chairman Jerome Powell gave no indication of when the Fed might begin cutting rates during his congressional testimony earlier this week. But he acknowledged that inflation has moderated and the labor market is „strong, but not overheated” – a few months ago inflation showed signs of accelerating again and the jobs market was red-hot.

However, the central bank needs to analyze more data before its September meeting. It can change its path. If the central bank doesn’t cut rates by then, some economists worry. Cracks may begin to deepen In the labor market. Some investors worry that the economy could even weaken dangerously Before that.

A September rate cut „may not be the magic elixir that some investors desire,” Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, wrote in a note Monday.

Prices fell in June for the first time since the pandemic began

Americans have been saddled with three years of rapidly rising prices, and have received more encouraging news on the inflation front, reports my colleague Alicia Wallace.

The consumer price index, a measure of the average change in the prices of commonly purchased goods and services, fell 0.1% from May, helping to lower the annual inflation rate to 3% from 3.3% in May. A recent report from the Bureau of Labor Statistics.

Falling gas prices and a decline in new and used car prices contributed to the first monthly decline since May 2020, BLS data showed. On an annualized basis, consumer prices rose at their slowest pace since June 2023, matching the lowest annual rate since early 2021.

A closely watched „core” index of core inflation, excluding energy and food prices, also came in lower than expected. Core CPI rose 0.1% from May – its slowest pace since August 2021 – reducing the annual rate of core inflation to 3.3% from 3.4%, marking a new three-year low.

Read more here.

Value is the new buzzword at fast-food chains across the country, reports my colleague Elizabeth Buchwald.

After price hikes turned off customers, restaurants recently responded by rolling out value menus.

For example, McDonald’s has a $5 meal that includes a McDouble cheeseburger or Mexican sandwich with small French fries, 4-piece chicken nuggets and a small soft drink.

At Taco Bell, you can now get two types of tacos, a five-layer burrito, chips with nacho cheese sauces and a medium drink for $7. This is 55% cheaper than ordering the items individually.

Like McDonald’s, Burger King offers a $5 meal package where customers can choose one of three burgers to pair with chicken nuggets and a drink.

But how much value is there in these types of „value” foods?

Actually, not as much as you might think, as the prices of many key ingredients used in value foods are falling. In other words: you pay the going rate (or more).

Read more here.