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The numbers were released on Tuesday by the Bureau of Labor Statistics. The decline is welcome news for the economy, which has been strained by inflation.
The downward dip was expected. Most forecasters anticipated annual inflation would fall from 2.6% to 2.3%, so the numbers bode well for the Fed and consumers.The producer price index is not as closely watched as the consumer price index, which is the most-tracked inflation gauge. The new CPI numbers for July are set to be released on Wednesday, but in June, CPI inflation fell by 0.3 points to 3%.
The likelihood of rate cuts increased greatly after the most recent employment report as well. After the lackluster jobs report, investors think the Fed will make a big cut at its next meeting in September.in July, far fewer than expected, and the unemployment rate rose two-tenths of a percentage point to 4.3%, the Bureau of Labor Statistics reported. That was a big miss from expectations that more jobs would be added and the unemployment rate would remain at 4.1%.
The report also triggered a recession indicator called the Sahm rule. That is when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. The indicator has signaled the start of all postwar recessions.When the Fed conducts monetary policy, it typically moves rates gradually by a quarter of a percentage point each meeting.
The economy has been the No. 1 issue on voters’ minds this election cycle, with Republicans hammering Harris for the country’s too-high inflation by tying her to the Biden administration’s stewardship of the economy.
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