“The worse a situation becomes the less it takes to turn it around, the bigger the upside,” and “Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes” — George Soros

1. U.S. Home Price Growth Cools to Near-Two-Year Low — the S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the country, rose 2.7% in the 12 months to April, the slowest on-year appreciation since mid-2023 and cooling from 3.4% in March, data released showed. Mortgage rates continued at a mid-6% range throughout April, keeping monthly payment burdens near generational highs and pricing out significant segments of potential buyers, said Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. The data suggests affordability constraints have hit previously overheated markets hardest, while traditionally stable markets with more reasonable price levels are attracting renewed interest, Godec continued.
2. US GDP Revised Lower as Consumers Slash Services Spending — US consumer spending grew in the first quarter at the weakest pace since the onset of the pandemic on a sharp deceleration in outlays for a variety of services. Spending on services contributed 0.3 percentage point to gross domestic product in the first three months of the year, the least since the second quarter of 2020, according to Bureau of Economic Analysis figures published Thursday. That was down sharply from a previously reported 0.79 point boost. Overall consumer spending increased at a 0.5% pace, instead of the previously reported 1.2%. GDP declined at a downwardly revised 0.5% annualized rate in the first quarter as a result.
The numbers indicate the economy’s woes early in the year weren’t entirely related to the deterioration in the trade balance related to the Trump administration’s tariffs.
3. Economy Core Inflation Rate Rose to 2.7% in May, more than expected — The personal consumption expenditures price index, the Fed’s primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%. Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared with estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories. The annual rate was 0.1 percentage point ahead of the April reading. The Fed targets inflation at 2%, a level where it has not been since early 2021. Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared with the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%.
4. China’s Industrial Profit Declined in May — Industrial profit fell 9.1% year over year in May, tumbling from April’s 3.0% rise, data released by the National Bureau of Statistics showed Friday. The decline was due to multiple factors, including insufficient demand, falling prices of industrial products and short-term fluctuations, said Yu Weining, a statistician with the bureau. Hefty tariffs imposed by the U.S. on Chinese goods since April led to production at many factories being suspended till late May, when Beijing and Washington reached a truce in a trade war. China’s industrial profit fell 1.1% in the January-May period, reversing from a 1.4% increase recorded in the first four months, the statistics bureau said.