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Information technology goods (smartphones, computers, iPads, smartwatches, laptops) are 0.7% of the CPI. Fresh fruits & veggies make up 1.1%. Apparel is 2.6% & has a 96% import share. Today’s move helps a bit but isn’t a game changer for the inflationary impact of tariffs.

Dallas Fed: 56% of respondents said they’d pass all (28.4%) or most (27.5%) of higher tariff costs to customers. 44.1% said “some.” Almost 90% said they’d raise px within 3 months. 26% said they’d raise px when the tariff was annc. 33.3% in < a month. 30.2% said in 1-3 months,

There isn’t much of a cushion of inventories for retailers. Of the $22.5 bil surge in finished consumer goods (ex-autos) in Mar, $20.9 bil was pharmaceutical prep drugmakers brought in to get ahead of sectoral tariffs. In Jan/Feb pharma made up $6.4 bil of $8.4 bil cons goods.

The Apr core CPI will be a core goods vs core services story. The Apr Adobe online data suggests some tariff pass-through into the goods CPI. But, a couple of services items may be quite weak. There is a lot of uncertainty this month, but the tariff impact has just begun.

Tariff impact in Apr CPI was somewhat less than fcast but hit some areas (auto parts ex-tires, audio equip, furniture&bedding). More to come in May & Jun. As expected, though, core was held down by weakness in airfares (demand eased in Apr while supply rose) & soft hotel rates.

BEA moved a lot of the "adjustment" it made to Q1 inventories from merchant whlsl nondur inv (drugs and druggists' sundries) to chemical mfg inv. This was likely to account for the type of pharma goods that were surged into the US in March (i.e., ingredients vs finished goods).

Maybe BLS-Labor Statistics should start pricing airfares for 2 travelers instead of one!

Core PCE in line at 0.12% and mkt-based core PCE was 0.25%, largely b/c latter strips out huge drop in Apr portfolio mgmt. Still, YoY mkt-based held at 2.3%. The Feb surge in equity mutual fund/ETFs that drove Feb portfolio mgmt and its April unwind remains a bit of a mystery.

The % of factory GDP that contracted rose from 41% in Apr to 57% in May, the highest in 6 months. The % below a reading of 45.0 fell from 18% to 5%, so while the weakness wasn't as severe, it broadened out noticeably. Indeed, only 7/18 industries reported growth vs 11 in Apr.

There was a record exodus from the workforce. The # who were employed in Apr but classified as "not in the labor force" in May surged by 917k. Outside of spring 2020, that's a record. Jun data may clear up if it's noise or perhaps some fallout of immigration policy.

Continuing claims are gradually drifting higher, but today saw a jump of 75k that got some attention. I'd note that it was in the Memorial Day week & 31k of the rise was a bounce in CA, where claims were down -21k in the prior wk. Some of the rise may be noise in the data.

The Fed has had their weekly ADP-FRB series since 2019. Chair Powell discussed it in an Oct 2019 speech. If it was showing the same weakness in employment as the May (29k) and Jun (-33k) ADP data, you'd think he wouldn't be going around describing the labor market as "solid."

This was a *very* broad-based rise in core goods x-autos. It jumped 0.55%, biggest MoM rise since Nov'21. Median CPI was 0.33% and 16% trimmed at 0.32%. Core PCE looking like a 0.3% in Jun. Some tailwinds for core goods & core services into Jul, + core PCE in Jul may be strong.

This is 100% wrong. This chart only tells us that the *type* of imputation has shifted towards “different cell” vs same cell, not how the share of imputations shifted. In Jan 2020, 2.5% of all prices were imputed and that peaked at 5% in Nov’22. We don’t know what that % is now.

The BLS data collection problems are much worse than we knew. The agency was forced to suspend collection of 15% of the sample due to the federal hiring freeze. That implies imputation of 15%-19% of the sample (incl Provo, Lincoln, Buffalo), or 3x the peak during covid (5.1%).

The Q2 core PCE deflator at 2.5% outpaced ests for a 2.3% rise. In particular, new seasonal factors boosted airfares for both domestic and int'l travel. Revisions most likely will be spread out over the quarter & YoY in Jun is like to rise.

Misinformation around this chart is rampant. The BLS was forced to cut data collection due to the *federal* hiring freeze. The BBG chart and story *mistakenly* state that 35% of data is imputed. That 35% refers to 1 of 3 types of imputations, not that 35% of prices are missing..