PPI Inflation Data Shows Economic Undercurrents: 5 Economists On What's Next

Zinger Key Points
  • April's PPI rebounded with a 0.2% rise, falling short of the expected 0.3% increase.
  • Multiple economists weighed in and said the data potentially gives the Fed the opportunity to pause rate hikes.

The U.S. Bureau of Labor Statistics reported a rebound in the Producer Price Index (PPI) for final demand in April, with a month-over-month rise of 0.2%.

The increase comes after a revised drop of 0.4% in March and falls short of the expected 0.3% increase. The modest rise is largely attributable to an 0.3% increase in prices for final demand services, which accounted for 80% of the overall upswing. 

What 5 Economists Are Saying Thursday 

Peter Essele, head of portfolio management at Commonwealth Financial Network, said the PPI figures are a solid confirmation that inflation is a thing of the past, saying that he expects the bond party to continue and predicting potential rate cuts in the second half of the year.

Quincy Krosby, chief global strategist at LPL Financial, said the PPI release is indicative of prices inching lower, easing market concerns about elevated prices. The data, along with higher initial unemployment claims, could lower Treasury yields while boosting equity futures, he said. 

Read also: Unemployment Claims Rise, Highest Since October 2021: Signs Of Cracks In The Job Market

Jeffrey Roach, chief economist at LPL Financial, highlighted the rise in service producer prices as the main contributor to the PPI increase. The inflation pipeline is clearing, with supply chains normalizing and commodity prices falling in response to global slowdowns, he said. 

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, welcomed the data as good inflation news following a similar pattern in the CPI data. The data gives the Fed room to take a pause in the next meeting, he said. 

Bill Adams, chief economist at Comerica Bank, said he interpreted the PPI data as a sign the economy is cooling down. The likely direction for unemployment is higher over the next six months, he said, and he expects the Fed to start reducing interest rates before the end of the year.

Read next: Paul Krugman's Debt Ceiling Fix: Trillion-Dollar Coin Or Premium Bond Strategy

Photo via Shutterstock. 

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Posted In: Analyst ColorNewsTop StoriesEconomicsFederal ReserveMarketsBill AdamsChris ZaccarelliInflationInterest RatesJeffrey RoachPeter EsselePPIProducer Price Index
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