The Consumer Price Index (CPI) for garments in the US experienced a modest decline of 0.3% month-over-month in May 2024, following a substantial increase in April. On a year-over-year basis, average retail prices for apparel rose by 0.8%, marking the highest price levels since the early 2000s. According to Cotton Incorporated, index values are approximately two per cent higher than those recorded from 2012-18 and about nine per cent higher than those from 2004-11.

Meanwhile, average import costs for cotton-dominant apparel saw a 1.6% month-over-month decrease in May (seasonally-adjusted), with a 6.3% drop year-over-year. Despite this, May's import prices were 7.3% higher compared to the average in 2019, reflecting ongoing supply chain challenges and global economic conditions.

The Conference Board’s Index of Consumer Confidence remained relatively stable, dipping slightly from 101.3 in May to 100.4 in June 2024. This index has lingered below the mid-point of its 95 to 115 range since late 2021, with a long-term average around 93.0. This stability suggests cautious consumer sentiment amidst economic uncertainties.

Inflation-adjusted consumer spending overall increased by 0.3% month-over-month in May, with a 2.4% rise year-over-year, slightly exceeding the average annual growth rate of 2.3% over the past year. Notably, consumer spending on apparel rebounded with a 1.2% increase month-over-month in May, reflecting improved economic confidence in discretionary spending.

The US labor market showed signs of slowing, despite exceeding expectations with 206,000 new jobs added in June. However, revisions to April and May figures resulted in a net downward adjustment of over 100,000 positions. The unemployment rate rose slightly from 4.0% to 4.1% month-over-month in June 2024, continuing an upward trend since early 2023. Wage growth also decelerated, with a 3.9% year-over-year increase in June, down from a peak of 5.9% in March 2022, reflecting broader economic adjustments post-stimulus.

Recent readings on inflation indicated a slowdown in price increases, with the core price deflator dropping to 2.6% year-over-year in May 2024, approaching the Federal Reserve's target of two per cent. This marks a significant decrease from 4.0% a year ago and the peak of 7.1% in June 2022, suggesting easing inflationary pressures.

Also Read : US Stock Futures Steady Ahead of Key Inflation Report; Tech Stocks Rally to New Highs

With unemployment rising and inflation slowing, there is renewed speculation about potential interest rate cuts by the Federal Reserve. The Open Market Committee is scheduled to meet at the end of July, with expectations for one or two rate cuts in 2024, pending sustained reductions in inflation.

These developments underscore the complex landscape of the US economy, characterized by nuanced shifts in consumer behavior, labor market dynamics, and inflationary pressures. As stakeholders await further economic data and Federal Reserve decisions, attention remains focused on navigating uncertainties amidst a changing global economic environment.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst & Finance Saathi Telegram Channel for Regular Share Market, News & IPO Updates

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX & Upstox.