By coinnews 
00:00 Speaker A
We’re going to break down the overall health of the US economy. We got a lot of data this morning. Wholesale prices fell unexpectedly in April compared to the month prior, showing that price pressures could be easing. Still, Fed chair Jerome Powell warned that tariff uncertainty could lead to inflation volatility. Meanwhile, retail sales in April were just above the flat line decelerating significantly from March, as consumers pull back spending. Joining me now, we’ve got Lawrence Werther, who is the DIWA Capital Markets chief US economist. Lawrence, great to have you here with us. So let’s just start with the inflation picture. What do consumers need to know about where prices are and potentially could be heading?
01:23 Lawrence Werther
Sure, Brad. Well, first off, thank you for having me today. I would say, broadly speaking, up until this point, uh the inflation data have shown ongoing deceleration. The CPI for for April, which we saw a little earlier this week, was friendlier than I had anticipated. But as you highlighted, the the big question going forward is what feedback effect will tariffs have on prices. Um there’s a lot of unknowns surrounding that right now, but I would say, by and large, it could cause inflation to become sticky again or maybe even pick up a bit in the back half of the year.
02:45 Speaker A
Are we getting a sense Yeah. And so further to that end, and I’ll I’ll let you finish as well. Are we getting a sense of just how much of the pricing pressures that retailers or that manufacturers are taking on, how much of that they’re actually passing on to consumers?
03:33 Lawrence Werther
You know, that that’s a great question. Uh so I would say thus far pass through has been muted. Uh you know, you’ve seen some instances where retailers have raised prices prospectively with the anticipation that costs will be higher. But you know, if you look at the ISM gauges for instance, or other PMIs where you get a sense of cost increases for the producer versus what they’re transmitting along to end consumers, that that transfer has been limited thus far.
04:48 Speaker A
And so as we’re taking a look at some of the retail sales data, and the pockets that specifically we’re seeing as evidence through some of the earnings, like Walmart’s, that consumers are still leaning into. Where are you seeing strength versus some of the weakness really start to kind of rear its head in certain aisles or categories?
05:35 Lawrence Werther
Okay, I would say first off, by and large, the the consumer is doing all right right now. The latest data that we have on the balance sheet suggests that households are relatively well capitalized, have a decent amount of liquid assets, uh labor market remains solid, and workers are seeing real income gains. So they haven’t completely pulled back, but I think you’re starting to see some caution in discretionary areas. I would note sporting good sales in the latest retail sales report were down in excess of 2%, sales of clothing stores were weak. Uh maybe you saw still a little bit of preemptive buying in areas like furniture, although that could have been price effects. So I would say you saw some front loading of big ticket items, like auto sales, just a month ago. But in areas where consumers can maybe postpone purchases, you’re certainly seeing more caution in my view. Now that said, you know, restaurant spending, which is one service area that we saw in the retail sales report, was exceedingly strong for the second consecutive month. So if nothing else, people are still going out to eat.