text: Loretta J. Mester, President and CEO of the Federal Reserve Bank of Cleveland, said at a conference earlier this week that the Fed’s 2% inflation goal will take “some time” to achieve. In an apparent response to JPMorgan CEO Jamie Dimon’s remarks, Mester says that she doesn’t see a hurricane ahead, although she acknowledged that the risks of recession have gone up. To achieve an inflationary goal of 2%, Mester goes on to say the Fed will moderate demand to contain price pressures, and while there hasn’t been a significant shift in demand yet, the Fed will take additional steps to ensure this occurs. She is happy with wages beginning to slow down and expects that September will likely result in an additional 50 basis point increase in rates. However, she recognizes that depending on where the economy stands, that hike may decrease to 25 points. Regardless, she sees an increase in rates for September. (AC: Rate hikes, in addition to slowing wages and low unemployment, remain the Fed’s basis for making decisions on quantitative tightening. If these indicators return favorable observations, the Fed will continue to hike rates until inflation has achieved a slowdown to 2%. – T.W.)NY Fed: Supply chains see reliefAccording to the Global Supply Chain Pressure Index (GSCPI) published monthly by the Federal Reserve Bank of New York, supply chain pressures declined in May, almost completely erasing the gains observed from March to April. The GSCPI declined to 2.9 in May, down from 3.4 in April and slightly above the March reading of 2.8. According to the NY Fed, this trend of index ratings around a level of 3 indicates a “stabilization of global supply chain pressures at historically high levels.” (AC: If supply chain pressures continue to average out at an elevated level, their compounding effects on inflation will result in the Fed having an even more difficult fight to tame inflation. While the NY Fed has not published its change in results for the indicators it uses to calculate the GSCPI, it’s extremely likely that the easing of China’s covid lockdown measures played a significant role in the monthly reduction to the index. This is also indicative of trade activity for the United States. Data released this week shows that wholesale inventories increased 2.2% in April, beating expectations by 0.3% and up from 2.1% in March. While this does indicate falling demand, it also shows that orders are beginning to be completed more quickly. Additionally, Foreign trade balances increased in health to -$87.1 billion for April, down from a deficit in March of -$107.7 billion. – T.W.)Americans: We are already in a recessionAccording to a recent survey conducted by the Economist, over half of Americans now believe the US economy is in an active recession. Not a partisan issue, the overwhelming majority of Republicans and almost half of Democrats believe we are experiencing a recession. While jobs data and growth trends are boasting relatively strong results looking ahead, the majority of recessionary concerns likely comes from the recent putter of the stock market and prolonged inflation, exposing everyday Americans to an overwhelmingly high cost of living each month. The Joint Economic Committee (JEC) finds that for the month ended April 2022, the cost of living, on average across all states, has increased by $569 since January of 2021. According to the JEC, “Even if prices stop increasing altogether [implying an inflation rate of zero], the inflation that has already occurred will cost the Amerage American household $6,829 over the next twelve months.” – T.W.Lumber falls: homes to follow?