The latest batch of economic data paints a concerning picture of rising inflation and cooling confidence. Consumer inflation expectations dipped ever so slightly to 3.5%, yet CPI surged to 4.2% in May — its third consecutive monthly increase — driven largely by a 23.5% spike in energy costs. Producer prices told a similar story, climbing to 6.5% year-over-year for the fourth straight month. That being said, MoM inflation seems to be slowing down. Small business optimism continued its slide, with the NFIB index hitting its lowest point since October 2024, as fuel costs and taxes squeeze margins. On the housing front, there was a bright spot: existing home sales rebounded more strongly than expected in May, up 3.6%, though mortgage rates ticked back up to 6.6% after a brief dip. Mortgage applications didn't care as the summer season kicks, surging 10.8% for the first week of June. Jobless claims remained historically low but crept higher for the third consecutive reading, a trend worth watching. Overall, the week's data reflects an economy under pressure — where energy-driven inflation is outpacing wage expectations and eroding both consumer and business confidence.
