P.S. that first chart (repeated here) shows the longer-term trend of slowing job growth. It is not a sign of weakness--the economy is stabilizing around the natural rate and the huge immigrant influx is behind us.

BTW the market agrees with the chance of a July rate cut going from 24% to 5%.

This obliterates the case for a Fed rate cut in July. The labor market is doing fine, especially given breakeven job growth is currently in the 50-100K range. Also edges us further to the view that current rates may already be at neutral, which is way above the FOMC median.

Amidst the noise of average hourly earnings you can discern a slowing trend towards the 3% annual rate that would be consistent with 2% price growth.

And here is prime age (25-54) employment to population ratio.

The unemployment rate ticked back to 4.1%. It has been between 4.0% and 4.2% for more than a year. That is not only unusual--it is especially unusual that it shifted up from ~3.5% to ~4% without continuing to move up further.

And here is private job growth.

Note all of this while the Federal government continues to shed jobs--although the job reductions (averaging 11k per month this year) are still small compared to underlying private sector job trends. (And in June state and local education increases overwhelmed federal cuts.)

The extraordinary U.S. economy continues to be extraordinary. 147K jobs added in June with upward revisions to April and May. Unemployment rate ticks down to 4.1%. Some contrary signs: participation rate down and hours down + weak wage growth.

This point has not been sufficiently internalized. Much lower job growth than we've been accustomed to is almost inevitable (and would have been even if Harris was President). AND, to the degree low job growth is supply Fed shouldn't do anything about it.

No credible estimate showing large dynamic scoring offsets—and many showing the opposite.

The PCE-based Ecumenical Underlying Inflation measure was 2.6% in May, much higher than the CPI based one. Pretty much all the measures agree--the last three months have been very tame but everything before that was not.

RT @ernietedeschi: So *hiring* rates among young people with BAs are down from a pandemic-recovery surge but are ~ in line with 2014-19 avg….

Overall this report gives some grist to people worried about persistent inflation, some to people worried about the economy slowing, and a lot to people who believe we need to wait and see before making any changes.

But the notable downshift in consumer spending this year is concerning. Real PCE is down in the first five months, the last two times this happened was during COVID and the financial crisis.

On the macro side, an unusually large decline in disposable personal income in May, but partly is spurious volatility--May was the largest percentage decline in Social Security benefits since 1972 but there was a big increase in April.

Market-based core may be more useful.

Here are the full set of numbers. Most of the measures lined up at this point.

Core PCE inflation came in just as expected. It has been very tame for the last three months--but shouldn't think of them in isolation but as part of a noisy process where inflation was much higher before. Annual rates:.1 month: 2.2%.3 months: 1.7%.6 months: 2.9%.12 months: 2.7%

RT @marthagimbel: I realize speculating on the end of all work is "fun", but I'd really prefer we all look at the data. Here is the ratio o….