[CoachKandSportsguy]

Consumer spending fell after adjusting for red hot inflation in May. The cooling in spending was in areas where bottlenecks and disdain over price hike a was the greatest. Big Downwards arrow in spending on big ticket durable goods - new & used vehicle, furniture, appliances; Upwards arrow in services.

Spending in April revised much higher. Big upward revisions to spending on goods for month. Personal disposable incomes posted second large decline, as boost triggered by stimulus checks continued to wear off. Next round of stimulus in July w/enhanced child tax credits checks.

Overall PCE inflation rose 3.9% from year ago in May, hottest since 2008. Core PCE up 3.1% from year ago, hottest since 1992. That was before the Great Moderation in inflation & interest rates of 1990s. Fed now leaning more toward hikes in 2023 than 2024.

Pivot in spending from goods should alleviate upward pressure on goods prices over summer, but found take until into 2022 for inflation to moderate. Fed’s patience on rate hikes will be tested. Note: Hike in 2022 justified if you start averaging inflation in 2020.

Tension will be how far is Fed willing to let the labor market, which is lagging overall economic gains, heal. Much of surge in wages for low wage jobs currently could also be transitory. Humility over hubris is warranted on forecasts.

I read and listen to educated and today's economists with lots of experience. . .