Consumer Prices Stable, More Economic Data Coming This Week

ARLINGTON, Va.–With the first six months of the year soon coming to a close, all eyes are on a package of economic reports coming out this week to determine if economic recovery is on its way.The report on existing home sales will be out today, with new home sales and the Federal Open Market Committee announcement both coming out Wednesday and the final results of the first quarter’s GDP expected Thursday.NAFCU Economist Katrin O’Connor reported that the recession continues to keep consumer prices in check, noting that overall consumer prices in May were lower than expected at 0.1%, while core CPI was “in line with expectations” at 0.1%. “Year-over-year CPI experienced the biggest drop since April 1950, which was primarily due to the significant decline in energy prices from a year ago,” she noted.Part of the equation, O’Connor suggested, is that employees aren’t inclined to ask for raises, hunkering down as they continue to hear news of layoffs and furloughs. At the same time, suppressed consumer demand is keeping companies from passing higher commodity prices on to customers.“The additional cash pumped into the economy through the recent Fed actions, however, will pose some inflationary threat in the long term but the expected slow recovery should provide the Fed with enough time to react to those inflationary pressures as long as energy prices continue to show a certain degree of stability,” she added.