Economic Report: Consumer Prices Soar at Fastest Year-Over-Year Rate Since December 1981

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – June 13, 2022

NAM Weekly Economic Toplines: 

Consumer prices rose 1.0% in May. Growth in food and energy costs remained very solid, up 1.2% and 3.9% in May, respectively, with gasoline prices up 4.1%. Excluding food and energy, core consumer prices rose 0.6% in May, the same pace as in April. The Consumer Price Index has risen 8.6% over the past 12 months, up from 8.3% in April and the fastest year-over-year pace since December 1981. At the same time, core inflation (which excludes food and energy) increased 6.0% year-over-year in May, down from 6.2% in April and 6.5% in March. Core inflation in March was the highest since August 1982. The current forecast is for year-over-year growth in the CPI to be 6.0% at year’s end, with core inflation at 5.0%. These data will continue to put pressure on the Federal Reserve to act aggressively and decisively on inflation. The Federal Open Market Committee will raise the federal funds rate by 50 basis points at its meeting this week (June 14–15), and it will make similar moves at its July 26–27 and September 20–21 meetings. The Index of Consumer Sentiment plummeted from 58.4 in May to 50.2 in June, the lowest reading on record. Americans continued to worry about inflation, with lingering uncertainties related to the Russian invasion of Ukraine. This survey is highly correlated with gasoline prices, and with that measure hitting all-time highs, it should not be a surprise that consumer confidence continues to fall. With that said, consumer spending has been largely resilient, and in April, U.S. consumer credit outstanding jumped 10.1% at the annual rate. Revolving credit, which includes credit cards and other credit lines, soared 19.6% in April. As such, Americans dramatically increased their willingness to take on new debt at the beginning of the year. Overall, U.S. consumer credit outstanding has risen 7.5% over the past 12 months, the strongest year-over-year reading since November 2011. The week ending June 4 saw 229,000 initial unemployment claims, the highest since the week ending Jan. 15. These data have gradually trended higher since reaching 166,000 claims for the week ending March 19, which was the second-lowest reading in the history of the series and the lowest since Nov. 30, 1968. Even with initial claims accelerating somewhat over the past three months, the data continue to reflect progress over the past year.  At the same time, the week ending May 28 saw 1,306,000 continuing claims, the same pace as in the prior week and remaining the lowest level since the week ending Dec. 27, 1969. The U.S. trade deficit fell from a record $107.65 billion in March to $87.08 billion in April. These data have been skewed in recent months by supply chain disruptions, higher petroleum prices and stronger economic growth in the U.S. relative to other markets. The goods trade deficit pulled back from a record high, down from $126.81 billion to $107.74 billion, with goods exports soaring to new heights, up from $170.04 billion to $176.11 billion. Goods imports dropped from a record $296.85 billion to $283.84 billion. U.S.-manufactured goods exports totaled $410.19 billion through the first four months of 2022, using non-seasonally adjusted data, soaring 15.55% from $354.98 billion for the same time frame in 2021. Likewise, manufactured goods imports grew 19.76% year to date from $754.88 billion in 2021 to $904.07 billion in 2022. READ REPORT