Morning Report: Still no real evidence of tariff-push inflation

Posted on June 27, 2025 by Brent Nyitray

Vital Statistics:

Stocks are higher this morning after the the Trump Administration announced a trade deal had been struck with China. Bonds and MBS are down small.

The Trump Administration announced a “signed” trade deal with China late last night, and Treasury Secretary Scott Bessent said that deals are “imminent” with 10 other trade partners. “We just signed with China yesterday,” Trump said during an unrelated event at the White House, though he did not provide further details. China said “both sides have confirmed further details on the framework.” The deal includes a commitment from China to sell rare earth metals to the US.

Here is an interesting graph of historical tariff rates in the US:

Kind of makes the whole thing look like a tempest in a teapot, doesn’t it?

Personal incomes fell 0.4% in May according to the BEA. The decrease was primarily attributable to a decrease in government social benefits. Personal outlays (i.e. spending) decreased 0.1%, which was primarily attributable to a decrease in spending on autos. The personal savings rate decreased a touch to 4.5%.

The all-important PCE Price Index rose 0.1% MOM and 2.3% YOY. This was in line with expectations. The core PCE Price Index rose 0.2% MOM and 2.7% YOY. The core index was a touch hotter than expectations, but it showed no major uptick due to tariffs.

Goods inflation (the area where you would most expect to see indications of tariff inflation) increased to 0.1% on a YOY basis, compared to the previous month where goods inflation fell 0.4%. Durable goods inflation rose 0.5% YOY while non-durable goods inflation fell 0.2%. Shelter inflation rose 0.3%, and appears to remain one of the bigger (albeit decreasing) drivers of inflation.

The increase in core PCE inflation was driven by services, which rose 3.4%, which was the same as April and has been on a general downtrend. Overall PCE inflation does not seem to have deviated from the overall trend we have seen for the past six months:

Bottom line: Still no sign of tariff-induced inflation. At some point, the Fed is going to have to admit that the economy is slowing and instead of stagflation, we are heading for stagnation.

Pending Home Sales rose 1.1% MOM and 1.8% YOY according to the National Association of Realtors. Contract signings increased in the Midwest and South, while they fell in the West and Northeast. “Consistent job gains and rising wages are modestly helping the housing market,” said NAR Chief Economist Lawrence Yun. “Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains.”

Prices are rising smartly in the Northeast, boosted by limited inventory. Inventory is increasing however, with homes for sale rising 31.5% on a YOY basis. Inventory increased the most in the West (up 40%) and th

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31 Responses

  1. jnc4p's avatar
    jnc4p, on June 27, 2025 at 8:59 am said:

    Worth a read:

    Rick Perry: I’m dedicating my life to fighting for a psychedelic drug

    This root of an African shrub can help heal trauma, substance use disorder and brain injury.

    Texas is allocating $50 million in public funding for FDA-approved clinical trials of the psychedelic drug ibogaine, which comes from the root of a shrub found in Africa. (Getty Images)

    By Rick Perry

    Rick Perry is a former governor of Texas and U.S. secretary of energy.

    https://www.washingtonpost.com/opinions/2025/06/27/rick-perry-psychedelic-drug-ibogaine/

    https://www.washingtonpost.com/politics/for-rick-perry-and-the-lone-survivor-a-father-son-relationship/2015/04/29/4c8cb0da-ed5e-11e4-8abc-d6aa3bad79dd_story.html

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  2. jnc4p's avatar
    jnc4p, on June 27, 2025 at 9:03 am said:

    “Kind of makes the whole thing look like a tempest in a teapot, doesn’t it?”

    Sub 5% to 15+% is a significant increase.

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  3. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on June 29, 2025 at 10:54 am said:

    I’m sorry, I thought this was America.

    Like

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  4. markinaustin's avatar
    markinaustin, on June 30, 2025 at 10:57 am said:

    Brent, San Antonio must be in the west because the rental market has gone flat for the first time in more than 30 years.

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    • ScottC's avatar
      ScottC, on July 1, 2025 at 8:55 am said:

      “Abrego, an apprentice sheet metal worker living in Maryland…”

      lol.

      Also worth noting, the reporter tells us that a court order prevents him from being deported to El Salvador, without ever telling us that the very same court issued deportation orders against him.

      These “journalists”…

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  6. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on July 1, 2025 at 1:23 pm said:

    This guy sanitized it, the pit was filled with starving lions. The sounds of the screams could be heard for miles.

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  7. jnc4p's avatar
    jnc4p, on July 1, 2025 at 2:23 pm said:

    FYI Brent:

    Monopoly Round-Up: The $100 Billion Race to Become the Home Buying Super App

    Rocket, Zillow, and Compass are all trying to take the $100 billion that now goes to real estate agents. It’s a war for the last monopolist standing. Plus, Trump enforcers pull back on antitrust.

    Matt Stoller

    Jun 29, 2025

    https://www.thebignewsletter.com/p/monopoly-round-up-the-100-billion

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  8. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on July 1, 2025 at 6:46 pm said:

    Goddamn!

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    • jnc4p's avatar
      jnc4p, on July 1, 2025 at 7:31 pm said:

      It will be interesting to see how long Thomas continues to identify as a woman if he can’t compete in the woman’s division anymore.

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    • jnc4p's avatar
      jnc4p, on July 1, 2025 at 7:40 pm said:

      This was interesting. Unfortunate that it’s needed:

      Froggy Girl

      a review of a great new children’s book

      Holly MathNerd

      Jul 01, 2025

      Froggy Girl is a cute, beautifully illustrated rhyming story about a little girl who wants to be a frog. Everyone in her life, including her parents — who give her prosthetic frog feet — and her teacher, who wraps her in a special flag, affirms this new identity.

      Over time, she realizes that she’s got a big problem.

      She cannot catch flies.

      She cannot live on a lily pad.

      She cannot do anything that real frogs can do, but with everyone in her life who matters to her agreeing to treat her as a frog, she’s stuck.

      Eventually, she heads out on an adventure where, with the help of an adorable turtle who becomes her friend, she realizes that she was born a girl, not a frog, and accepts all the wonderful things that come along with being who she is.

      https://hollymathnerd.substack.com/p/froggy-girl

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  9. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on July 2, 2025 at 3:46 pm said:

    If you follow Jarvis on X, this is his Sistene chapel.

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  10. jnc4p's avatar
    jnc4p, on July 3, 2025 at 10:09 am said:

    Interesting summary of all the recent Wells Fargo incidents:

    https://www.racket.news/p/welcome-back-wells-fargo

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  11. ScottC's avatar
    ScottC, on July 3, 2025 at 11:41 am said:

    Calling Tucker Carlson: are you on board with war against Iran now?

    https://archive.ph/n4iHZ

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    • Let the mutherfuker burn!'s avatar
      Let the mutherfuker burn!, on July 3, 2025 at 3:11 pm said:

      In defense of those highly suspicious of US military intervention, a robust, aggressive and loud opposition is a good idea, especially if it’s intraparty and that party is in charge.

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      • ScottC's avatar
        ScottC, on July 5, 2025 at 7:51 am said:

        I completely agree. I have no problem with people who are skeptical of US intervention. I am one of them. I just think Tucker’s approach to Cruz was utterly disingenuous and dishonest, and unless he now demands that the US go to war with Iran on the back of this story, my inclination has been substantiated.

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  12. jnc4p's avatar
    jnc4p, on July 3, 2025 at 3:04 pm said:

    And the truth can now be told.

    “Democrats Denied This City Had a Gang Problem. The Truth Is Complicated.”

    https://www.nytimes.com/2025/07/03/magazine/aurora-colorado-venezuela-gangs.html

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  14. jnc4p's avatar
    jnc4p, on July 7, 2025 at 12:01 pm said:

    Slowly, they are starting to get it. That this piece was published in The Atlantic is progress:

    How Public Health Discredited Itself

    To earn back the respect of Americans, the profession needs to return to its original principles.

    By John Tierney

    July 7, 2025, 6 AM ET

    https://www.theatlantic.com/ideas/archive/2025/07/public-health-politicization/683409/

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  15. jnc4p's avatar
    jnc4p, on July 7, 2025 at 12:51 pm said:

    NoVA, if you are still around you may find this of interest:

    Monopoly Round-Up: Ohio, Kentucky Go FULL COMMUNISM on Pharma Prices

    Replacing private pharma middlemen with state agencies cut costs and saved pharmacists. Wheee! Plus, Trump’s tax bill passed, DOJ beat Apple on antitrust, and South Park creators got mad at a merger.

    Matt Stoller

    Jul 06, 2025

    https://www.thebignewsletter.com/p/monopoly-round-up-ohio-kentucky-go

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