Latest / Markets with Megan: A Quick Financial Markets Update / Are Inflation Fears Overblown? | S2 E049 | 05-30-25

Transcript

Are Inflation Fears Overblown? | S2 E049 | 05-30-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: There's not really many signs of inflation due to the tariffs, at least as of yet.
• 0:03
  Megan Horneman: It's Friday, may the 30th, and this is Markets with Megan.
• 0:06
  Megan Horneman: If you like this podcast, please subscribe.
• 0:08
  Megan Horneman: Hit that alarm bell.
• 0:09
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• 0:12
  Megan Horneman: But we're here today to discuss the economic data that we got this morning, specifically around inflation, as well as income and spending.
• 0:19
  Megan Horneman: The reports that we get today includes all three of those different factors.
• 0:23
  Megan Horneman: Let's break down the income and spending first.
• 0:25
  Megan Horneman: First of all, the personal income rose eight-tenths of a percent on a month-over-month basis.
• 0:30
  Megan Horneman: That was much better than expected.
• 0:32
  Megan Horneman: The expectation was that it would only rise 0.3%.
• 0:36
  Megan Horneman: When you look at where that was really driven by, it was not the goods-producing part of our economy, it was more the service-providing side of the economy.
• 0:45
  Megan Horneman: So services are still doing well.
• 0:52
  Megan Horneman: The personal spending side, though that was much weaker than it was the prior month.
• 0:54
  Megan Horneman: It was only up two-tenths compared to 0.7 the prior month.
• 0:56
  Megan Horneman: So what that does is it drives the personal savings rate high.
• 0:59
  Megan Horneman: We actually have seen the savings rate now jump up to about a one-year high, and that shows that consumers are a little bit concerned about the economy, but it also makes us feel a little bit comfortable that they can maybe withstand some economic volatility.
• 1:13
  Megan Horneman: Now let's get to the big report, though, and that was the Fed's preferred inflation indicator, and that's the other thing that comes out alongside this PCE report.
• 1:21
  Megan Horneman: The core PCE is what the Fed looks at.
• 1:24
  Megan Horneman: On a month-over-month basis, it rose one-tenth, so it matched the reading last month.
• 1:29
  Megan Horneman: On a year-over-year basis, though, it's only rising 2.5%, and that compares to 2.7% the prior month, so it is coming down.
• 1:42
  Megan Horneman: The trajectory is lower.
• 1:42
  Megan Horneman: It's actually the lowest year-over-year reading that we've seen since 2021.
• 1:45
  Megan Horneman: Now, this is good news.
• 1:47
  Megan Horneman: The Fed will like this report, but again, let's just remember that this is from April.
• 1:51
  Megan Horneman: We won't have really any tariff impact until maybe next month, when we get some of the economic data, specifically around inflation.
• 1:58
  Megan Horneman: But hey, let's take the win, for today.
• 2:00
  Megan Horneman: This is good news.
• 2:01
  Megan Horneman: The markets are relatively unchanged today.
• 2:04
  Megan Horneman: We're going into a weekend and there still is a lot of trade talk out there, so we're not seeing big moves in the market on this.
• 2:10
  Megan Horneman: We think this still keeps the Fed probably on the sideline in their June meeting.
• 2:14
  Megan Horneman: They don't have another meeting after that until July 30th, and then the next one's in September.
• 2:18
  Megan Horneman: We're pushing the rate cut expectations out to probably that September meeting, but we'll see how the economic data materializes between now and then.
• 2:27
  Megan Horneman: That's all we have for this week.
• 2:29
  Megan Horneman: There's lots more next week.
• 2:30
  Megan Horneman: It's the first week of the month, and the first week of every month is really jam-packed with economic data.
• 2:36
  Megan Horneman: So we'll get data on manufacturing.
• 2:38
  Megan Horneman: On the labor market, we'll end the week with that market-moving unemployment report.
• 2:44
  Megan Horneman: You'd like this, please.
• 2:45
  Megan Horneman: You can go to a further history of our podcast at marketswithmeganfm.
• 2:49
  Megan Horneman: Thank you.