I thought this was going to be an easy week. Clearly, we would be talking about inflation, right? And we will, but we also should discuss the UAW strike and consumer confidence. So, let’s get right to it.
Pop in Headline Inflation
First up: inflation. As you may have heard, the headline number came in higher, as gas prices rose last month, and that’s not good news. But, when you look at other areas, the data continued to get better. Gas prices bounce up and down. So, while last month’s pop isn’t good, it doesn’t affect the downtrend we see in other areas. In fact, core inflation, which is a better measure and excludes energy and food, dropped significantly over the past year. The pop in headline inflation did matter, but not too much, as the overall trend remains positive.
Unprecedented UAW Strike
Another thing that mattered this week was the United Auto Workers (UAW) strike. This is one of the first major labor actions in years. It is unprecedented as the union is striking against all big three automakers. With unemployment low and a labor shortage, this strike will be a key test of just how much power labor has. It may also both slow the economy and drive inflation back up. So, there is a lot to watch here. It’s hard to say what the outcome will be. But any way that you look at it, it will matter a lot in the months to come.
Drop in Consumer Confidence
The final thing that caught my attention was a surprising drop in consumer confidence. That drop, coupled with a weak retail sales report, suggests that despite the strength of the jobs market, consumers may be starting to pull back. That matters because shopping is a major driver of growth in the economy—and that kind of confidence-driven slowdown could be a signal of more weakness to come.
A Cautionary Week
Overall, with signs of higher inflation and slower growth, it’s been a cautionary week. The good news is that slower growth should help with inflation and that slower growth is, in fact, still growth. Could be better but could also be a lot worse. And it’s still not a bad place from which to start the weekend.
Have a great one!