This week brought a fresh round of U.S. economic data that offered a mixed view of inflation pressures, labor market conditions, consumer sentiment, and broader macro trends. In this article we'll be looking at the insights we can gather about where the U.S. economy currently stands using Trading Central's Economic Insight tool.
Inflation data sent somewhat conflicting messages. The Consumer Price Index (CPI) rose 2.4% year over year in May, edging up from 2.3% in April but still falling short of the 2.5% forecast. Core CPI (which excludes food and energy) held steady at 2.8%, defying expectations of a rise to 2.9%, a sign that underlying price pressures may be stabilizing.
On the producer side, the Producer Price Index (PPI) climbed 2.6% year over year in May, surpassing both the 2.3% consensus and April’s upwardly revised 2.5%. This marked the first annual acceleration in four months. On a monthly basis, headline PPI rose 0.1%, in line with estimates, while core PPI came in at 3.0% year over year (vs. 3.1% expected) and also rose 0.1% on the month, reversing forecasts for a decline.
The University of Michigan’s latest survey reflected softer inflation expectations. The 1-year inflation expectation dropped sharply to 5.1%, well below the expected 6.6% and last month’s reading of 6.6%. Meanwhile, 5-year inflation expectations ticked down to 4.1%, from 4.2% previously.
Consumer sentiment showed a notable rebound. The Michigan Consumer Sentiment Index rose sharply to 60.5 in June from 52.2 in May, far outpacing expectations for a decline to 52.1. This was the first improvement in five months.
Subcomponents of the survey supported this strength:
Small business sentiment also improved. The NFIB Small Business Optimism Index rose to 98.8 in May, beating expectations of 96.0 and snapping a four-month streak of declines. April’s reading was 95.8.
Mortgage rates remained elevated. The MBA 30-Year Fixed Mortgage Rate inched up to 6.93% for the week ending June 6, from 6.92% the week prior—keeping affordability under pressure.
Treasury yields continued to climb following their respective auctions:
These rising yields reflect increasing borrowing costs, which may weigh on consumer and business activity going forward.
Labor conditions remained relatively stable. Initial jobless claims for the week ending June 7 totaled 248,000—slightly below consensus (250,000) and unchanged from the prior week’s revised figure. This suggests no significant shift in unemployment trends for now.
Retail data pointed to softening consumer activity. The Redbook Index, which tracks same-store sales, rose 4.7% year over year for the week ending June 7—the smallest gain since January 2025. Still, the index has stayed in positive territory since July 2023, showing that retail sales continue to grow, albeit at a slower pace.
Meanwhile, supply chain activity showed ongoing inventory accumulation. Wholesale inventories rose 0.2% month over month in April, defying expectations for flat growth. This marked the fourth consecutive monthly gain, suggesting businesses are still restocking even amid mixed demand signals.
This week’s data points to an economy finding its footing—where inflation appears to be stabilizing, consumers and businesses are cautiously regaining optimism, and labor conditions remain resilient. However, rising borrowing costs, softening retail momentum, and geopolitical uncertainty add layers of complexity. Escalating tensions between Israel and Iran, along with persistent U.S.-China trade frictions, could further weigh on global confidence and supply chains. As the Fed navigates this evolving landscape, markets will remain sensitive to both domestic indicators and external shocks in the days and weeks ahead.
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