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It’s about that time of the cycle for ‘learned’ academic papers to start popping up claiming the NAIRU, the ‘non accelerating inflation rate of unemployment’ (or something like that) is in actual fact more like 7% rather than the currently believed 5%.

And expect these findings to show that it’s always been closer to 7%, but that a temporary glut in global supply, due to the removal of prior international trade constraints, temporarily permitted lower unemployment rates to not trigger accelerating inflation.

Now, however, this ‘slack’ has been used up.

That will suggest that inflation will continue to accelerate until the unemployment rate is over 7%, much like it is in the eurozone.

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• Import Price Index MoM (Released 8:30 EST)
• Import Price Index X Petro MoM (Released 8:30 EST)
• Import Price Index YoY (Released 8:30 EST)
• Import Price Index X Petro YoY (Released 8:30 EST)
• Import Prices TABLE (Released 8:30 EST)
• Advance Retail Sales (Released 8:30 EST)
• Retail Sales Less Autos (Released 8:30 EST)
• Retail Sales X Auto, Building Materials, & Gas Stations (Released 8:30 EST)
• Initial Jobless Claims (Released 8:30 EST)
• Continuing Jobless Claims (Released 8:30 EST)
• Business Inventories (Released 10:00 EST)

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Import Price Index MoM (May)

Survey	2.5%
Actual	2.3%
Prior	1.8%
Revised	2.4%

The Fed sees this as imported inflation pouring through the $ channel.

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Import Price Index X Petro (May)

Survey	n/a
Actual	113.8
Prior	113.2
Revised	n/a

Just in case you thought it was all oil.

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Import Price Index YoY (May)

Survey	17.2%
Actual	17.8%
Prior	15.4%
Revised	16.3%

The Fed sees this as a relentless assault on inflation expectations.

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Import Price Index X Petro YoY (May)

Survey	n/a
Actual	6.6%
Prior	6.6%
Revised	n/a

[comments]

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Import Prices TABLE (May)

[comments]

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Advance Retail Sales (May)

Survey	0.5%
Actual	1.0%
Prior	-0.2%
Revised	0.4%

Another better than expected report, and the previous month revised up as well.
If anything, the Fed sees the downside risks to growth are diminishing.
Rebate checks may be doing more than the Fed anticipated.

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Advance Retail Sales ALLX (May)

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Retail Sales Less Autos (May)

Survey	0.7%
Actual	1.2%
Prior	0.5%
Revised	1.0%

Seems to be broad based spending, though still moderate.

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Retail Sales X Auto, Building Materials, & Gas Stations (May)

Survey	n/a
Actual	247.7
Prior	245.7
Revised	n/a

[comments]

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Initial Jobless Claims (June 7)

Survey	370K
Actual	384K
Prior	357K
Revised	359K

Back up to the higher end of the ‘new’ range, as the 4 week average remains very steady.

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Continuing Jobless Claims (May 31)

Survey	3118K
Actual	3139K
Prior	3093K
Revised	3081K

The highest report of this cycle, but still far below recession levels. Also, with GDP prospects looking up, the Fed is getting concerned that unemployment isn’t high enough to keep inflation in check.

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Business Inventories (April)

Survey	0.3%
Actual	0.5%
Prior	0.1%
Revised	0.2%

Higher than expected and prior month revised up as well. At the point in the cycle this probably indicates inventory is being built to meet higher sales expectations, rather than inventory accumulating due to sales falling short. Inventories have been on the low side, and rebuilding them adds to GDP.

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