U.S. Data and Powell Testimony Rundown
June 24, 2025
Despite scalding criticism of Jerome Powell by President Trump over the past few days, the chairman’s testimony remained closely aligned with his press conference last week. The nuanced message depicts a rate cuts as highly likely during the second half of 2025; justifies the lack of a cut during the year’s first half by the fact that most private sector forecasters and the Fed officials have adjusted near-term inflation projections upward because of higher tariffs; while the near-term direction of inflation seems highly likely, the magnitude of the tariff impact is varies widely among forecasters; future data on U.S. inflation and the labor market are likely to be the main determinants of interest rate decisions over the rest of this year; the U.S. economy is closer now to meeting the Fed’s employment mandate than its inflation goal; and great care will be taken to making sure that the tariff shock doesn’t generate second-order shifts due to higher inflation expectations. To summarize, many rate path scenarios remain in play.
The Conference Board’s measure of consumer confidence fell back to a reading of 93.0 this month from 98.4 and was 17.5% weaker than last November when President Trump was elected.
Two measures of U.S. house prices weakened in April. The FHFA index fell 0.4% on month and to a 3.0% 12-month rate of increase. The Case-Shiller index was just 3.4% above a year earlier, its smallest gain in 22 months.
The Richmond Fed manufacturing and service sector surveys both dropped to 3-month lows in June.
The U.S. current account deficit soared to a record $450 billion in the first quarter. That followed $312 billion in the final quarter of 2024 and equaled 6.0% of GDP after 4.2% in the last quarter of 2024. The deficit averaged 2.5% of GDP during the first Trump presidential term and 3.6% during President Biden’s stewardship.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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