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Market Wire - "Anti-Goldilocks" Personal Spending Data Smacks Dollar

CalendarJune 30, 2022
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American households slowed spending last month as consumer confidence plunged - and the Federal Reserve’s preferred inflation measure continued its rise. Data released by the Bureau of Economic Analysis this morning showed inflation-adjusted household outlays climbing just 0.2 percent in May. In real terms, spending fell 0.4 percent - roughly corresponding with a previously-reported -0.3 percent month-over-month fall in retail sales. In unadjusted terms, personal income rose 0.5 percent month-over-month, while wages and salaries increased at the same pace. 

The core personal consumption expenditures index - the Federal Reserve’s preferred inflation measure - rose 0.3 percent from April, up 4.7 percent year over year. This was slightly softer than consensus estimates which were set at 0.4 percent and 4.8 percent, respectively - but remains far above the central bank's comfort zone.

Yields fell after the release, and the greenback dropped as odds on a hard landing in the US economy grew. 

The Canadian economy expanded at the expected pace in April, with activity rising 0.3 percent month-over-month. Numbers released by Statistics Canada this morning show the services sector growing 0.1 percent while goods-producing industries jumped 0.9 percent - with real estate activity slowing as mining and energy extraction sectors surged on higher global prices. The loonie jumped even as a preliminary estimate suggested that the economy could shrink 0.2 percent in May. 

Author

Karl Schamotta

Karl Schamotta

Chief Market Strategist

Karl leads Corpay’s currency research group, focused on analyzing shifts in the world economy and creating strategies that help businesses harness market volatility.

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