Fed's preferred inflation gauge cools, adding to likelihood of a September rate cut

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Fed's preferred inflation gauge cools, adding to likelihood of a September rate cut

2024-07-26 22:22 Last Updated At：22:31

WASHINGTON (AP) — The Federal Reserve's favored inflation measure remained low last month, bolstering evidence that price pressures are steadily cooling and setting the stage for the Fed to begin cutting interest rates in September.

Prices rose just 0.1% from May to June, the Commerce Department said Friday, up from the previous month's unchanged reading. Compared with a year earlier, inflation declined to 2.5% from 2.6%.

Excluding volatile food and energy prices, so-called core inflation rose 0.2% from May to June, up from the previous month’s 0.1%. Measured from one year earlier, core prices increased 2.6%, unchanged from June. Economists closely watch core prices, which typically provide a better read of future inflation trends.

Taken as a whole, Friday's figures suggest that the worst streak of inflation in four decades, which peaked two years ago, is nearing an end. Fed Chair Jerome Powell has said that this summer's cooling price data has strengthened his confidence that inflation is returning sustainably to the central bank's target level of 2%.

Lower interest rates and weaker inflation, along with a still-solid job market, could brighten Americans' assessment of the economy and influence this year's presidential race between Vice President Kamala Harris and former President Donald Trump.

Friday's report also showed that consumer spending ticked higher in June. So did incomes, even after adjusting for inflation. The report suggested that a rare “soft landing,” in which the Fed manages to slow the economy and inflation through higher borrowing rates without causing a recession, is taking place — so far.

“A two-word summary of the report is, 'good enough,'" said Robert Frick, an economist with the Navy Federal Credit Union. “Spending is good enough to maintain the expansion, and income is good enough to maintain spending. And the level of inflation is good enough to make the decision to cut rates easy for the Fed.”

Consumer spending rose 0.3% from May to June, slightly below the previous month's 0.4% gain. Incomes rose 0.2%, down from 0.4% in May. Average inflation-adjusted income has risen 1% from a year ago, Friday's report said, though that figure has slowed from 1.9% at the start of the year.

With the pace of hiring cooling and the economy growing at a steady, if not robust, pace, it’s considered a near-certainty that the Fed will cut its benchmark interest rate when it meets in mid-September. The central bank will first meet next week. Powell is expected to say afterward that the Fed’s policymakers still want to see additional data to be sure that inflation is slowing consistently.

Still, the central bank will likely signal next week that it's getting closer to reducing borrowing costs.

“I expect Powell will be quite comfortably pointing to September for an easing," said David Page, head of macro research at AXA IM, a London-based investment manager.

Last month, food prices ticked up just 0.1%, extending a run of slight cost increases after grocery prices had soared in 2021 and 2022. Compared with a year ago, food prices are up just 1.4%.

Energy prices tumbled 2.1% from May to June, led by sharply lower gas prices. Energy costs are up 2% over the past year. New car prices fell 0.6% last month, after having surged during the pandemic.

After jumping to 7% in 2022, according to the measure released Friday, inflation has fallen steadily for the past year. Even so, the costs of everyday necessities like groceries, gasoline and rent remain much higher than they were three years ago — a fact that has soured many voters on the Biden-Harris administration’s handling of the economy.

Inflation is cooling even as the economy keeps steadily expanding. On Thursday, the government reported that the U.S. economy grew at a healthy 2.8% annual rate in the April-June quarter, with consumers and businesses spending at a solid pace. That was up from just a 1.4% annual growth rate in the first three months of the year.

Businesses are still adding jobs, though most of the hiring in recent months has been concentrated in just two sectors of the economy: health care and government. The unemployment rate has edged up to a still-low 4.1%, after the longest stretch below 4% in a half-century.

Fry's 2-run homer in 10th sends Guardians to stunning 7-5 win over Yankees, close to 2-1 in ALCS

2024-10-18 11:38 Last Updated At：11:41

CLEVELAND (AP) — Jhonkensy Noel saved Cleveland's season. David Fry extended it.

With two huge swings, the Guardians hit back at the big, bad New York Yankees and tightened an AL Championship Series that was just about over.

Noel connected for a two-run, pinch-hit homer with two outs in the ninth inning and Fry hit a two-run shot in the 10th as Cleveland rallied past New York 7-5 on Thursday night in an unforgettable Game 3 to pull the Guardians to 2-1 in the best-of-seven series.

Cleveland’s unexpected season that included 92 wins and the AL Central title was on the brink after Aaron Judge hit a two-run homer off All-Star closer Emmanuel Clase and Giancarlo Stanton followed with a solo drive in the eighth to give the Yankees a 4-3 lead.

But Noel, a burly outfielder known as Big Christmas, delivered an October gift and Fry followed with his second momentous homer in these playoffs.

“That’s exactly who we are,” first-year Guardians manager Stephen Vogt said. “We never quit. We get punched in the teeth pretty hard there in the eighth, and our guys stepped up huge for the guy that carried us all year long. That was really fun to see."

It was exhausting, thrilling and dramatic as the Yankees and Guardians jammed a season's worth of highlights into three innings.

"That was playoff baseball,” Yankees manager Aaron Boone said. “Both sides just kept coming with haymakers and big at-bats, big moments off of two really good bullpens. They outlasted us. They had one more good swing than us. That’s part of it. We’ll be ready to roll tomorrow.”

The Guardians trailed 5-3, had no runners on base in the ninth and were moments from falling into a 3-0 deficit when Lane Thomas doubled against Luke Weaver, who had been perfect in eight save chances since taking over as the Yankees closer in September. Noel then delivered his towering homer.

As he rounded the bases, Progressive Field fans danced on their seats and in the aisles in a moment reminiscent of Rajai Davis’ tying homer off Aroldis Chapman in the eighth inning of 2016 World Series Game 7.

It was fitting that Davis, who now works for Major League Baseball, was on hand to see Noel's homer that now belongs beside his in Cleveland history.

“We’re a team that don’t quit,” Noel, who came in 1 of 15 in the playoffs, said through an interpreter. “We play 27 outs, so that’s kind of what happened today.”

Fry joked Noel's homer was stunning and no surprise at all.

“It was amazement,” he said of the reaction in Cleveland's dugout. "It was so much excitement, but then it was just like, oh, yeah, of course Jhonkensy hit a game-tying homer against a guy throwing 98 hits it for a homer.

“Nobody does that. Like Vogter said coming in the game, it's like, here you go, big boy, hit a two-run homer, and he did. It’s so cool.”

Fry’s swing ended an instant fall classic.

Bo Naylor singled leading off the 10th against Clay Holmes and Brayan Rocchio sacrificed. Naylor took third on Steven Kwan's comebacker before Fry, who hit a Division Series-saving homer in Game 4 at Detroit, sent a 1-2 sinker into the left-field bleachers.

Fry watched the ball sail into the stands before heading toward first. He was mobbed by teammates after crossing home plate as fans tossed drinks in the air while trying to process the emotional rollercoaster they had endured.

“I blacked out,” Fry said. “I remember being like halfway down the first baseline looking back at the dugout and looking and saying, alright, I just have to make sure I touch all four bases and get home and celebrate.”

Cleveland can tie the series with a win Friday.

The Guardians still have a chance to end baseball's current longest World Series drought, stretching to 1948.

Judge homered in Game 2 but was batting just .143 (3 of 21) with eight strikeouts this October before coming to the plate against Clase, the AL’s saves leader and MLB’s most feared reliever.

After falling behind 1-2 in the count, Judge, who was on the field taking batting practice five hours before the game, sat back and drove a 99 mph cutter from Clase the opposite way to right, the ball just clearing the outfield wall.

New York’s players poured out of the dugout to celebrate as Judge, the likely AL MVP after hitting 58 homers in the regular season, circled the bases following his 15th postseason homer.

The Yankees, who had been held to three hits over the first seven innings, were still exchanging hugs and high-fives when Stanton crushed a 1-2 slider from Clase, sending it over the center-field wall.

But even though they had the lead, the Yankees weren't taking anything for granted.

“I wouldn't say we were looking ahead to the World Series,” Judge said. “We still have another game, even if it was 3-0.”

Clase had been impeccable all season, allowing just five runs and recording 34 consecutive saves while dominating almost every time he took the mound. But he was tagged for a three-run homer in the ninth by Kerry Carpenter in the ALDS before Judge and Stanton got him within a span of eight pitches.

New York had two on with no outs in the ninth but scored just one run, on Gleyber Torres' sacrifice fly. Eli Morgan ended the inning by throwing a called third strike past Juan Soto.

Rookie Kyle Manzardo hit a two-run homer in the third for Cleveland.

The 30th postseason matchup between the Guardians and Yankees was another tightly contested matchup between two franchises who know each other well this time of year. This is their seventh meeting in the playoffs.

Cleveland finally got some length from a starter as Matthew Boyd went five innings, the most Vogt has permitted this postseason. The left-hander gave up two hits in the second before retiring 10 straight, seven on easy grounders.

TRAINER’S ROOM

Yankees: Reliever Ian Hamilton was lifted in the sixth inning after appearing to hurt himself while covering first base. The team said he had left calf tightness. ... Boone said LHP Nestor Cortes came through a brief batting practice pitching session on Wednesday without any issues. Cortes is recovering from an elbow strain and hasn’t pitched in a game since Sept. 18. If New York advances, he could be added to the World Series roster.

UP NEXT

Guardians RHP Gavin Williams will start Game 4, his first appearance of the postseason. The hard-throwing Williams had a disappointing regular season (3-10, 4.86 ERA), which began with him on the injured list for several months with an elbow issue. He’ll face Yankees RHP Luis Gil, who went 15-7 during the regular season.

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