US Economics Weekly "Federal Reserve regime change" Pingle

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US Economics Weekly "Federal Reserve regime change" Pingle

25 until September. May durable goods orders and trade

data will help shape Q2 real GDP estimates. We expect orders of non-defense capital

goods to rebound 0.7% in May after an April dip. We project core PCE prices rose

0.36% in May, lifting 12-month inflation to 3.45% (just rounding to 3.5%), while

headline PCE rose 0.49%, pushing year-over-year inflation to 4.11%. The final June

University of Michigan consumer survey data is due out, alongside other surveys next

week. Fed commentary is set to resume following the June FOMC meeting with several

regional presidents scheduled to speak. The following week, Chair Kevin Warsh joins

ECB President Lagarde and BoC Governor Macklem on a panel in July 1. Unemployment

insurance filings have been hooking back up, does that continue? The Week Ahead

begins on page 27.

The Week in Review: hawkish dots and little guidance

We recap the FOMC meeting on page 11. The FOMC voted unanimously to keep the

target range of the federal funds rate unchanged at 3.50% to 3.75% in June. The June

SEP dots revealed a 9-9 split between participants assuming rate hikes would be

appropriate this year and those who did not. The new Chair Warsh did not submit a dot.

His first FOMC meeting as Chair brought a statement overhaul and a press conference

which indicated a regime change, a shift to less transparency and clarity. Headline retail

and food services sales rose 0.9% in May, and control group sales, which feed into GDP,

rose 0.7%. The report restored expectations of decent consumption growth in Q2,

supported by elevated tax refunds, despite higher gas prices. We think that in Q2, we are

at peak fiscal support from OBBBA for households and businesses. We took our Q2