US Monthly Economic Indicators (Through February 2025) US core consumer price inflation rate (excluding food and energy) is trending at 4.0% annualized and accelerating. The Fed's favorite inflation metric, core personal consumption expenditures price inflation rate (excluding food and energy) is trending at 3.9% and also accelerating. Both indicate re-emerging inflationary pressure and are well above the headline year-to-year 2.8% figure. Volatile producer price inflation is also trending up at 9.8%. Average hourly earnings change is trending at 3.8% annualized, which means that workers are no longer beating core inflation. Unemployment rate trend is 4.0%, still very low. On the activity side, Industrial Production (real) is trending up, Retail Sales (nominal) are trending down, and Housing Starts (real) are trending up. Money supply M2 is trending up, reflecting consistent loosening by the Fed, notwithstanding their anxiety about inflation. Two-year and ten-year Treasury yield trends are divergent and non-inverted, which is healthy. The most recent daily Treasury rate figures are 4.0% for 2-year and 4.4% for 10-year, again non-inverted. Conference Board's Leading Economic Index declined in February, indicating economic headwinds but no immediate recession. Our Simple Macro Model forecasts trend real growth and quiet inflation over the next few quarters, but that picture is significantly lagged at this point. The economy is currently in flux, with re-emerging inflationary pressure and chaotic economic moves by the new administration. Consumer Sentiment is plunging, down 11.9% in March from February and 28.2% from a year ago; this reflects a distraught public and is definitely a negative signal. We are in a new, blustery domain.
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