By coinnews 
00:00 Speaker A
Now joining us now, Yelena Maleyev, uh KPMG senior economist. Uh good to see you, Yelena. So we were just talking about all of the data that we have gotten. Now, we were talking about hard versus soft data, what that’s going to mean to the Fed, but today we did get some hard data in in terms of retail sales that came in a little bit less than estimated. So how are you reading, I guess let’s talk about the growth side of the equation first and how you’re reading that and how you think the Fed is going to assess it.
00:49 Yelena Maleyev
Definitely. So American consumers seem to be gripping their pots of gold tightly, um unwilling to test their luck amid all of this economic uncertainty and cloudy outlook ahead. So we did see that actually core retail sales that feed directly into GDP did rise at 1%. So that gives us about a 1% annualized growth rate for the first quarter for overall GDP, which is less than half of what we saw in the fourth quarter. So it is a real slowdown, the hard data is starting to show a real slowdown. Um consumers have been um showing souring sentiment for some time, we’re at the lowest sentiment levels in two and a half years, but now we’re seeing that matched with a pullback, especially in discretionary spending, especially by those higher income households that have really been folding up the economy over the last few quarters.
02:24 Speaker A
So that doesn’t sound great on the one hand, and then we have uh inflation on the other hand. What’s your assessment of inflation and how patient do you think the Fed is going to be able to be?
02:47 Yelena Maleyev
The Fed is going to have to be quite patient because they don’t want to front run any policy on tariffs or supply chain disruptions. Um they have been more willing to wait and see the impacts of these disruptions in in pre in the past years. And so we do think that the Fed is going to be on hold for the remainder of this year, um barring any sort of economic uh recession or sort of crisis that would cause them to have to cut this year. We do think that inflation is going to start to turn up, uh perhaps maybe nearing that 3%, maybe just a bit higher year on year, uh into the second half of the year. And that would put uh the Fed in a very difficult position of not wanting to cut and creating that more inflationary environment, but of course being aware of the stag part of the stagflation uh and not wanting the economy to go into a recession if it doesn’t have to. So a very tough uh line to balance for the next few uh Fed meetings, for sure.