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Economic Research: U.S. Real-Time Data: Prices Are Cooling On Weakening Demand

S&P Global Ratings Economics' U.S. real-time economic indicators continued to weaken amid high prices and interest rates in early August. Consumer spending is finally softening on higher prices, with Johnson Redbook retail sales decelerating to a 13.5% year-over-year pace, after reaching an all-time high of 18.2% in early January. The University of Michigan Consumer Sentiment Index remains near its record low from May as the high prices take a bite out of household purchasing power and the stock market sags.

The COVID-19 viral caseload has moderated through Aug. 8 and is only 1% over rates seen a month ago. Mobility readings have also changed little over the last two months. Certain measures of mobility, such as seated diners, air traffic, and Google Community trends for retail and recreation activity, have weakened in August but remain near their 2019 levels (see charts 1-6).

Prices are starting to cool. Although still high, the commodity prices we track continued to fall through Aug. 8. All remain above their 2019 averages. Lumber prices are down by about 69% from an all-time peak on May 7 last year, as housing weakens on higher interest rates. Gasoline prices are also down by $1 from their all-time high on June 13, while metal prices and the cost of shipping goods to the U.S. have fallen from their respective highs. Market participants' long-term inflation expectations ticked higher for the week ended Aug. 8, though they are down sharply from recent peaks on the back of lower energy prices.

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This report does not constitute a rating action.

U.S. Chief Economist:Beth Ann Bovino, New York + 1 (212) 438 1652;
bethann.bovino@spglobal.com
Secondary Contact:Joseph Arthur, Des Moines;
joseph.arthur@spglobal.com
Research Contributor:Shruti Galwankar, CRISIL Global Analytical Center, an S&P affiliate, Mumbai

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