Philly Philly We’ll start with the easy stuff this week, the Philly Fed’s regional manufacturing index came in at 17.6 for April, below expectations for a 21.9 reading (any number above 0 in this index is reflective of a growth environment). While companies are still expecting growth over the next six months, sentiment seemed to be slightly cooling on a few components of the index like current activity, new orders, and shipments. On the other hand, there were increases to the employment and price components. The employment indicator that’s part of this index reached an all-time high last month and the price component reached the highest reading since June 1979. Looking…

Finding new highs Consumer prices rose by a whopping 8.5% in March on an annual basis, which is the steepest increase in prices we’ve seen since the end of 1981. This was a touch higher than expectations for an 8.4% inflation print. Unfortunately for the average consumer, despite the strong wage growth we’ve seen, it’s still falling short of price increases, resulting in real wage growth actually being slightly negative. Moral of the story: Many economists are calling this “peak inflation” as expectations are for the rate of growth to start moderating from here. I’m not so sure about that given we also got a look at the March producer…

Replacing one issue with another There wasn’t a ton of economic data published this week, but we did get the latest read of the ISM Services Index showing the services sector grew in March for the 22nd consecutive month. Even though companies are still being impacted by capacity constraints, supply chain issues, and inflation, they are seeing the labor shortages starting to come off. At the same time, heightened geopolitical risks are adding another layer of complexity for a lot of businesses. Moral of the story: The biggest takeaway for me from this report is the easing labor shortages – it basically means that supply of labor is starting to increase as COVID…

Hanging in there In a nice chance of pace, consumer confidence increased for the first time this year in March, but still remains below levels from last year as (unsurprisingly) consumers are pretty unsettled by what’s happening in Ukraine as well as the resulting “pain at the pump” (anyone else being bombarded by this political slogan?!). Consumers are expecting inflation to be 7.9% in the next 12 months, which is the highest level ever recorded, but confidence is holding in there because of the strength of the labor market (and its accompanying wage growth). Moral of the story: As long as consumers feel confident about their job prospects, the chances are that…