The Employment Cost Index, which measures employee salaries and benefits, rose 1.2% in the first quarter of 2024, indicating that inflation pressures remain high. This raises concerns that the 11 interest rate hikes by the Federal Reserve may not have been sufficient to curb inflation. The Fed is expected to maintain its current rate policy for now, while considering the timing of potential rate cuts later this year.
The housing market is seeing record new home sales, but prices have fallen slightly. This is likely due to a lack of existing homes for sale, making new homes more attractive.
However, the manufacturing and service sectors are showing signs of weakness. This could lead to job losses and cause the Federal Reserve to slow its pace of interest rate hikes to stimulate the economy. The market reaction to this news has been mixed.
