the restaurant line item, steve liesman, stood out to me, as well. especially given the consumer had a little bit of relief from lower gas prices overall, lower fuel prices, yet they still felt the need to pair back on what they are spending out. it was the biggest decline since january. what do you make of that, and you said most economists didn't see much in the retail sales that makes them too concerned. so can you put that into context for us? >> well, i have two thoughts on this, and i wonder if steven would comment. i have been thinking about this very question, melissa. i think there's a rejection -- i was talking about this idea of the $30 two-year and burger bill. i think people are recoiling a little bit at that. no matter what your income level, when you go out to something that used to be $20 and now it's $30, you're like, wait a second, i think i'm going to lay off of that. we may be in the process of some disinflation or deflation. i don't know, steven, how the bean counters figure out when mcdonald's goes to the $5 meal, and i'm not ta

cnbc senior economics reporter steve liesman is live in w with what to expect today.come to all of you. steve, kick things off for us, and what a different panoply of expectations after that cp ireport. >> very good way to put it. a lot is in flux under the surface for a fed that's expected to be on hold for the 11th straight month. a big question, how the committee thinks about what is a second good inflation report in a row after three bad ones that started the year. here's what we will look for in the statement. a possible economic downgrade with that lower gdp number. do they characterize inflation progress as stalled or continuing now? i suspect they'll say they're still not confident enough to cut given there's a 3-2 split so far in the first five months of the year. now, looking tat projections, cuts reduced to maybe one, but more likely two from three in the prior forecast. unemployment rate has to tick up a little bit. they're already at 4%. and of course, there will be some debate as to the long run rate. 2.6, some talk about it going higher again, meaning t

steve liesman was talking earlier today on the network about the month-to-month changes and how if we're slightly higher than where we've been over the past few years, it will be almost impossible to get back down to 2%. so, if that's the case, and the fed keeps pushing off those rate cuts, if the labor market doesn't weaken enough for them to make a move, then you have short-term nominal rates that are higher than your nominal gp growth. that's going to lead to some kind of a pullback, financial creases, recession, whatever words you want to use to describe a pullback. and then you could have some elements where the market anticipates that the fed is going to then come to the rescue. you have that fed put that is in place. you'll stoke inflation higher as you have more stimulus put into the economy. we're in an election year, scott. we know more stimulus is coming. we've already seen it with the employment. retention attack credits are ramping up again. that's another $80 billion coming into the economy. i think there could be some elements where you're stoking inflation and the market

steve liesman. rebecca, what do you think?e that the fed cuts in september, if the data are telling them that inflation's close enough to two, maybe the unemployment rate is ticking up a tiny bit, but it's going to be what they call a hawkish cut. they'll cut and say the cadence is going to depend on what the data do from here and -- they don't set monetary policy on the back of fiscal. they takefiscal as a given. if we have a change in the government and we have a whole new wave of fiscal stimulus, unfunded tax cuts, trade war, then that's going to factor into what they do. they're not going to just go with what the market's discounting, necessarily. so, i -- if they cut in september, it's one, and then just hold off, and i don't think september's a given. >> yeah. >> i agree with you. i can't see people who are holding back, if only we had a 25 -- >> bam, unleash, let's go, let's go. >> remember where we were eight, nine months ago with the expectation of six cuts or so -- >> yeah. >> and the market kept being disappointed,

let's bring in steve liesman. hi, steve. steve liesman.thanks very much. yes, we have a winner not only in the top division but in the second division. we have mount hebron from elle cot, maryland, this is their ninth win over all over the years here. let me introduce the winners to you. >> hi, my name is mahin. milton freedman is my favorite economist. >> hi, my name is diego murphy. my favorite economist is daniel conman. >> nice. not economist, behavioral psychologist. that's okay. cool. >> hello. my favorite economist is hyak. >> that's a good one. >> hi, my favorite economist is dave rikardo. >> this is your ninth win with mount hebron. what would you say is in the water? >> i think it's a lot with our teacher. he really supports us and is also very educated on this topic and really helps us to learn and become better. >> what's in the water in maryland? >> i mean, i got to say, hike, our school has been doing it for a while. and you know, our success only really started around 2016. and that's because the generational amount of input

let's bring in steve liesman. steve?lly, it can't be a global rate cutting party until the fed shows up. even in europe, the ecb is not so much partying or easing as it says it's reducing how restrucktive its policy rate is. so it's being described as a cautious cut, the ecb reducing its deposit rates by a quarter point to 4.25. it's the first rate cut by the ecb since 2019. you can see there, it's now late to the rate cutting gathering, which including europe, switzerland, and canada, as well. ecb president explaining the put by saying that underlying inflation has eased. inflation is forecast to decline over time towards the 2% target. and the real rates are more restrictive with the decline in inflation. importantly, she described the cut not as an easing but a removal of excess restriction. she suggested the ecb remains restr restrictive, so there could be further cuts to come, because the rates are still restrictive and far from neutral. she said they are data dependant. jpmorgan writing in the page of the cuts that

for more let's bring in cnbc senior economics reporter steve liesman.ve, it's good to have you on after a really important week, obviously. how would you sum up how -- what the takeaway should be? you had a statement and an outlook that was hawkish. i didn't think the fed chair himself was hawkish at all. >> yeah. i mean, i thought overall the fed was -- remained spooked by the first three months of inflation and was unwilling at this point to say the couple better months we've had have really offset that. i think it's because it's a 3 to 2 score right here. it has been an amazing week. i don't know if you have the chart of the past seven days of the two-year note, but it's worth going through it, scott. to remember what we've been through, it looks like sort of a bad scene from the roadrunner and the coyote. that surge in yields, that's your payrolls. then it plunges on. cpi. comes back as the market overall judges the fed to be kind of hawkish, and then plunges again when you have the ppi. we're down about 21 basis points on the week. it was a good we

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steve liesman, have a great weekend. >>> despite the fed's mantra of higher for longer, investors are betting on cuts. inflows of nearly $2 billion this year and value funds saw outflows of 2 $2.6 billion. the s&p value index falling, while the growth index is up about 2% since wednesday. my next guest is still sticking with value and says the fed has to start easing now. let's bring in my next guest. great to have you back. welcome. how are you? >> thanks, kelly. great to see you again. thanks for having me back. >> i wanted to wave the red meat at the bull here by quoting the declines in value. michael was pointing out earlier this week that value factors have done poorly, but if you define value as quality, that quality is outperforming more than ever. any way, the podium is yours. >> i think we're in a market that's dominated by momentum, and we're seeing the stocks that are going up continue to go up. whereas the stocks that are not going up are not doing anything. and right now, the market is really being dominated by a small handful of stocks, especially nvidia. it's very hard

>> steve, thank you very much. steve liesman.presided over a spending increase of $4.9 trillion in his first term, while joe biden has overseen $3.8 trillion in spending increases in his first three years and five months in office. how did the committee arrive at these numbers? they found that president trump approved $5.3 trillion of gross primary or non-interest spending increases over ten years. $2.5 trillion of that, non-covid related. that was partially offset of $500 billion in spending cuts. the net spending increase is $2.1 trillion. for biden, he approved $5.7 trillion of gross primary spending increases, and $3.9 trillion without covid. but biden also had $1.9 trillion of primary spending cuts, which were offsetting to the higher spending in the biden era. without covid, biden spending increase would be $2.0 trillion. bottom line, given trump's massive tax cuts, the committee says his record on the total deficit is much worse than biden's. trump added $8.4 trillion, opposed to biden of $4.3 trillion. kelly, back to you.

let's get to steve liesman with the headlines. >> kelly, yeah. patrick harker saying his fed base is one rate cut will be appropriate by year's end if the economy evolves as he has forecast. he goes on to say however, that two cuts or no cuts, they're both, quote, quite possible if the data break one way or another. he says high inflation remains his leading concern and the latest data has been quite promising. he welled come twelcomed the ma data, and he still lacks the cut rates or the inflation is headed back to the 2% target. the current policy, he says will continue to service well for a bit longer. so what's he doing? he's monitoring the data over the next several months to decide whether it is, quote, the right time to decrease the policy interest rate. so definitely a bias there to cut and just not necessarily able to do so now. he forecasts a long back to target for inflation and the economy has proven resilient to high interest rates. mon monetary policy he calls in restrictive data, and it's been choppy and not significant to make a ca

let's bring in steve liesman, who is there on the ground. steve? >> hey, melissa. it was a dovish morning followed by what you might call a hawkish afternoon for markets. and you can see the entire drama playing out in the bond market, where yields plunged on the two-year note with that better than expected inflation report this morning. then they bounced higher with a more hawkish fed statement. bonds did hold onto some of their gains as stocks seemed to ignore a good part of the -- what the fed did today. forecasts for the fed this year, for the funds rate went from three in march down to one right now for the full year. they did raise the neutral rate, suggesting they think they're less restrictive than they were before. they see higher inflation this year, and a modest nod in the statement to the recent inflation progress that we've seen. fed chair powell was maybe a bit more dovish than the statement and the projections. he suggested one or two cuts were still possible beginning in september, and that he welcomed today's inflation report. but he said to remain

steve liesman has the results of the latest monitor. steve, what are you learning? >> you know, the american consumer, kelly, bouncing back strongly in may after an average april. it boosted spending in several discretionary sectors and it tells you there's strength out there and it counter the story of a weakening economy that we were talking about. the cnbc and the retail monitor, we use real credit card spending data with affinity solutions that shows may spending and take on autos and gas and that's the headline number to just 0.3 in%. it rose versus a negative in april. core retail takes out food services rising 1.2% to near 2.9% and it's the sectors that are really interesting here. if you look as krcross the inte, restaurant and bars doing quite well. clothing and accessories along with sporting goods and general merchandise stores also north of 1% here. gas stations are negative as we're building supplies. this is the strongest of the 20 months we've tracked with the credit card data and it is unclear, you can't tell and is it a readout for april or the star

our own steve liesman is there.ision national competition finals and we'll get to watch, if you want to play along live. steve, over to you. >> kelly, thanks so much for we are about to begin the council of economics competition for the adam smith division, and that's the advanced division. these guys took a.p. courses and all kinds stuff. high school students are instein smart if he did economics. these are the teams left after the brutal series, we have mount herron, and philips exeter academy from new hampshire. a big round of applause. here we go. >> you guys are the winners as far, and only one takes home the top geek. thanks to the judges, dick, julie, nick, chris, thank you so much for being the judges for in thing. we reviewed the rules. we're ready to go? >> two thumb up. >> question one of the atom smith division. question one is what domestic open market monetary policy should a central bank pursue if it wants to strengthen the value of the domestic currency oat foreign exchange market? 20 seconds. foreig

really good insight, steve liesman, thank you. you want to opine on that? >> i think he's spot on just about everything he said. i also want to point out, and i think he alluded to, there's a seasonality to the inflation data. and it's strange because it's supposed to be seasonally adjusted and yet over the last 14 years on average, and it happens most years so it's not it's just the average. it's quite consistent over time. the first quarter is by far the first inflation quarter followed by the second and weaker in the second half. and that was, that fact was ignored november 1st when it did the rhetorical pivot by doing the three month annualized that we're taking second half numbers and analyzing them. but it's quite likely that seasonality will continue. steve's right on when he says the auto insurance thing is very important. because some things are adjusted at year end. that happens with rents a lot. auto insurance and things. i believe we're going to see the inflation rate settle in on the headline cpi. we have a model that's quite simplistic that's

steve liesman, cnbc. walk me through the committee's average inflation forecast. core pce is now forecast to be 2.8% by the year end. it's already 2.75, and after today's number there were several forecasts on the street at the end of this month. does that tell you the average official expects no further progress in inflation and in fact that it's going to get worse and if you have this wrong doesn't it mean that you sort of -- you could have wrong the outlook for rates there? >> so what's going on there is we had very low readings in the second half of last year, june through december really and we're now lapping those. as you go through the 12-month window, a very low reading drops out and a new reading comes in. the new reading gets added to the 12-month window. so it's just a slight element of conservetivism that we're assuming a certain level of incoming monthly pce and core pce numbers. we're assuming, you know, a good but not great numbers. and if you put that on top of where we are now you get a v

thank you very much. >>> check in with steve liesman. he's got more on this right now.together what we heard yesterday on cpi, definitely shows an improving picture on the inflation front >> yeah. this is going to flatten, i believe, the cpe cpi yesterday, below expectations this number, ppi, put the two together that gives them the fed's deferred inflation indicator they do a good job my guess looking at goldman said 0.16 yesterday i think may be lower than that we'll wait until they run their models intraday. interesting abouts they and what will help i believe the pce, services, the deuce egg. a big part of it looking for trade part didn't see it in there in any event service number was zero and, yeah here it is a lot of negatives on trade numbers. final demand for goods was minus 0.8 on prices there. really flattered by energy, too. you get big drop 7.1% drop in gasoline. minus 4.8% on energy overall then this jobless claims number. watching it creep up unemployment creeps up wonder was it a head fake and look at unemployment rate in the household survey and say may

let's get a preview from steve liesman. >> to paraphrase "lord of the num numbers," too low a number weakening more than expected. we are looking for 190 this morning. it support from 175. it is still 50 k less than the average we had. continuing the sub-4 trend we had. hourlily hourly earning is 0.3%. last month's 75,000 downside surprise was a big break from the pattern. the consensus had payroll 70% of the time going back to january of 2023 and missed by 100,000. some forecasts are looking for catch up this morning. we expect re-acceleration says morgan stanley says after softness in april after the temporary readjustment after the warm winter. morgan stanley and others looked through any strength this morning because they think any rebound will mask a broader slowing if anything is coming. citi thinks the weakness will start today. they wrote we expect soft market data in april and may is just the start of the sharper weakening in the labor market in the coming months to have fed officials cutting rates in july and 100 basis points total this year. that's what citi thinks. payrol

let's bring in steve liesman. steve, to build on what rick was just saying, it's going to point us in the direction of finding out how many cuts may be coming this year. >> yeah, the friday number is important. while we await that number, kelly, we did an analysis of possible inflation paths, showing the economy has to be lousy or perfect to get the fed down to that 2% target. but even a slight rise of monthly inflation from the prepandemic level, the fed may never hit that target, creating a series of tough choices for the fed. a little background. average monthly core inflation before the pandemic, orunning u to 2%. by contrast, in the period of the great financial crisis, it was 0.9 and the high was 0.4 or better than that. so we modeled that inflation with job inflation to around the 2% target at the end of 2024, at the prepandemic average of 0.15, that's the middle choice. it would take until the spring of 2025, so the fed could cut towards the end of the year because it wants to start cutting before you get

joining me onset is our very sown steve liesman. steve, please explain to me these reports.weirder. what's going on? >> i think it was -- i forget who it was that i was talking to. listen, use the household survey for ratios, don't use it for levels. actually, that was a tweet series by jason fuhrman. i remember now. it is designed to give you ratios of how many people we surveyed were employed, how many people were out of the workforce, how many people were participated. >> how many were men, women, this age. >> it is an unusual gap. i use a series that is corrected for the different and the concepts in there. and it's a 4 million job gap. it is the largest that we have seen over a period of time. >> this has been going on for a few months now? >> they went their separate ways about jupne of 2022. it's been growing like this and it's cumulative over time. but it doesn't say you should dismiss the payroll numbers, and the low jobless claims tell us that the job market is in good shape. >> i was going to ask which is the truer tell, and it sounds like -- and diandiana, should

our steve liesman is here with the numbers. steve, what did it show? >> good morning, sara.d it is more hawkish for fed rate policy. for the end of the year they're averaging a number and the 29 respondents are below the current level and then a kind of paltry 2.9% return over 2025 up to just 5521, but this group has been pessimistic on stocks and pretty much wrong about it even though they're pretty good on interest rates. the fed is seen coming down with 20 basis points and unclear of what happened to the yield curve and touched more next year. the probability for the soft landing about 50% of where it's been while the probability of recession at 31% and that's the lowest level we've seen since early 2022. how about the expectations for the fed and 46% probability on a rate cut in september and 62% on a rate cut in december. both are down from the may survey and both are a bit below the market pricing. 5 5.01 is for year end. and qt pushed to march by respondents and it had been 2025. inflation is kind of paradoxically and the fed cutting rates too late is number two. pres

let's get to steve liesman with those results now. steve, what i do they tell us?good afternoon. respondents to the survey see growth gradually weakening over the course of this year. but they've given up on predicting that the economy would approach or near stall speed. here are the numbers for the next several numbers. 2% in q2, up from the q1 we have so far. and down q3 and 4, and 2025 at one point, 3%. while those numbers show this gradual weakening, it's worth remembering, a year ago, all the next four quarters were forecast to be just barely above zero. the economy, of course, as we know, has showed surprising resilience. here are the numbers for the cpi, 3.4% currently. looking for 3 for the full year. 2.6 for 2025. cpi runs about a half a point above. unemployment rate ticking higher to 4.4%. it had been a low of 3.5%. and the recession, kelly gave it away earlier, down 31% probability. that's the lowest since 2022. soft landing probability, 50%. no rate cut is priced in until december in the survey, with a september rate cut just below 50%. so a more hawki

steve liesman joining us now from washington this morning. good morning. >> good morning.ability to move the markets this morning. you got the press conference at 2:30 which has a life of its own at stake with the cpi is whether the modest progress we saw in april continued in may or the backsliding of the first quarter returns. here are the numbers we're looking for. 0.1, tick down in the headline to 0.3, that will leave unfortunately the year over year unchanged at 3.4. and then not much progress on the month to month change on the core cpi, but that could give you a tick down. really what it has to do with a prior ones dropping off the old -- the calculation of the year over year. so, 3.5 ex-food and energy versus 3.6 in the prior month there. the cpi is one piece of the inflation puzzle for the fed. they need the wholesale price to get a good read on the preferred indicator pce at the end of the month. i'm sorry it is so complicated. then look at the statement here, possible economic downgrade, do they -- and the question, do they describe inflation progress as stalled

let's bring in chief investment officer peter bookmar, diane swan, michael gapen, and steve liesman.l house here. we appreciate everybody's house. steve, just kick things off. what jumps out to you? >> i like the real spending being up to 0.3. that's a good number. incomes are doing well. the big number is the 0.1. the big question is does it continue? the fed is not modeling 0.1, i'm just actually crunching the number now. to get to the 2.8 that the fed is forecasting, it's got to be at least on the core, it's got to be -- they're looking at 0.2. so the fed is actually, i don't know the they're more realistic or pessimistic, capital economics thinks they're more pessimistic than is warranted right now. the core pce is running 0.2 below right now where the fed thinks it will be by the end of the year. >> and that says we've already hit target. should we expect to say there? >> i would be really surprised if 0.1 each month was the new trend. i do think something closer to 0.2 is probably where we are. certainly,it's a bit trickier p. we're now saying we have four months of bad inflati

our steve liesman is here.ee with some descriptions of this as a hawkish cut? >> yeah definitely. those are my first characterization of it as the ecb ecb cut rates since september 2019 bringing the main financing rate down to 4.25. part of the move that includes other central banks, but so far, it's excluded the united states. in her press conference ecb president christine lagarde did describe the decision as a cautious move that wasn't designed to ease, so much as to remove excess restriction. >> are we today moving into a dialing back phase? i wouldn't volunteer that because, as i said, we are making a decision on the basis of the confidence that we have that we are on a path we will need data and more data and analysis of the data to constantly confirm that we are in the disinflationary path. >> okay. why did the ecb cut? underlying inflation has indeed eased over time from double digit downs to mid 2s right now. inflation is forecast to further decline over the next couple years and rates are more restric

steve liesman is here to talk about it. we have canada waiting on ecb, j.. >> it's amusing how ever report is an inflation report. nobody cares how service sector is doing, jobs are doing. it's what it mean for the fed? look at adp. going along good along with the government's private sector job report. a blowout in june, that's the spike on the left there, but not done a bad job predicting where it is. maybe the private sector this month comes in weaker. look at what that meant for probabilities. david and sara were talking about the slower data. all of that seeped in. first i want to show you the change in probabilities. down after the ism report this morning. we did update them but they were higher. y but they're all up from say last friday when we got what data we have for the month of june -- or for the month of may has come in on the weaker side. one other chart i want to show you is the probability of that second cut. able to dissect this data and say what is it saying for november and december. low probability for that second cut in november but it

you do not want to miss steve liesman interview with loretta mester coming up on "squawk box."eek. session lows at all-time highs. right now the dow looking like it would open 200 points lower and s&p firmly in the red. nasdaq off of its highs as well. look at apple up 11% in the past three days and retag the title as the most valuable listed u.s. company from microsoft for the first time since all the way back in january. tesla up 3% this week. higher in the premarket after shareholders voted to approve elon musk's record breaking pay package valid between $45 and $56 million. joining me now is katie stockton. >> good morning. >> why don't we start about the momentum trade big tech and apple is a part of that. when you look at the charts and technicals, do you see that having more room to you run or frothy and foamy, whatever word you want to use for it? >> i would say more room to run from an intermediate and learning perspective. we are breakouts in the nasdaq 500 and not to monitor the trend indications we have at the same time. specifically for the nasdaq 100. this is a pr

. >> there's never a full shift away from the fed as steve liesman knows because there is a parade of fed speak nearly every day. whether it's steve talking with austan goolsbee, had mary daly today. i feel like more fed speakers are coming out and talking about the risks of going too restrictive for too long. >> yes i guess you want to be a little careful with that assessment, scott. it could be true, it could be just that the fed speakers we have had have been those who have noted that and i think it's definitely become more a part of their discussion this idea that the risks are more balanced and talking up issues like the extent to which there are concerns goolsbee price today in my interview talked about the idea of needing to question just how restrictive the fed is given some of the weakness we've seen in some of the economic data not that it's all that weak, but it has definitely taken a step down those are two things to mark and then daly who just talked to deirdre bosa and also gave a speech, also talked about gathered weakness they have to watch. we're going to watch to see

the cnbc monitor that steve liesman talks about every month, that's quite a bit higher than that.suspect that census will revise up the may numbers. but even at 0.3% for may, if you string together 12 of those, you're at 3.5% growth on an annual basis, and that's where we were before the pandemic. i think if you look at lots of ipdz kay fors, debts, savings rates, delinquencies, they're reverting to the mean, which they are back to prepandemic numbers, which is not a surprise that we would have an economy that moderated and slowed down a bit. >> i want to ask you about tariffs, but just to put a point on this. we were just speaking with mark zandi, who said i think the consumer is strong but you need rate cuts now to maintain that strength, and without that -- people would welcome that. from where you sit, do you think that would largely be the case or do you think inflation would still be a problem? >> well, i know mark, and he's been to speak at our event and boards and things and i think he's incredibly on point and i agree with much of what he said. i'm not sure maybe it would

the fed telling our steve liesman it hasn't made any decisions on the new rules and it's not targeting a specific range, but we saw a lift midday on these headlines and that would be a good thing for the sector you so love, savita >> absolutely. i think, you know, the yield curve steepening, banks getting a little loan growth, this is all -- this is all a good period >> look, banks have had a target on their back, really since the great financial crisis i'm not saying it's off, and i'm not saying it wasn't deserved. there's no question that too big to fail for a reason, but if you think about the balance sheets here, and how they have been buffered and the dynamic of capital give-back, i think is spr important. i also think about, you know, citi bank, the cheapest of the money center banks, a bank i'm long, the services dynamic of their business and the growth you're seeing is part of where that bank is rerating. so, cost from a.i., all that, you know, year of efficiency and savings that other people are getting, they're getting a little credit for, but the services business is really

steve liesman has that for us. >> good afternoon. up gains today after a wall street report that the fdic will vote thursday to downgrade the bank's littling will to deficient from a shortcoming. cnbc has not been able to confirm this story. but citi sent us the following comment, which reads in part, "our balance sheet and financial health remains strong with high levels of capital, liquidity and reserves. we konltd to have confidence that citi could be resolved without the use of taxpayer funds or an adverse impact on the financial system." it's unclear how serious a development this is. banks are required to post and create living wills, get them approved by regulators. the living wills tell regulators how to unwind them in the event that the bank fails. it's rare for a living will to be labeled deficient. deficient is the lowest rating. "the journal" notes that the fed is not expected to join the fdic in the finding of a shortcoming and this had been flagged back in 2022. "the journal" also said no penalties are associated with t

let's get to the results now with steve liesman.res so we know for september, is it still 50%? >> i'm going to do that right now, joe. >> okay, you do that at the end. i do. >> 52.6, joe. >> 62? >> 52. >> 52. 68.7 for november. 9% for july. anything else, sir? >> no. so it's 50/50 whether we get any? or do you have -- >> the point, baby. >> you have to add september and november together? yeah. does that equal 110 maybe? >> no. 60. divide it by two. >> no. no. that is the probability of that of a rate cut. >> i'm sorry. do your survey. i'm sorry. >> okay. we are going to talk about what people think about the election here. it finds our respondents disapproving of president biden's handle of the economy and trump's higher marks in most cases than president biden. 39% of biden's handling of the economy was approved and in line with the surveys of the national product. 48% believe that trump will win a second term in the whites and 35% think it's biden and 17% unsure. the stock market 23% biden 77% and the economy, a little bit closer

also veronica, a political economy chair and our own steve liesman. steve, go to you first.t going to add one number to what rick gave you, which is this special index. the super core that powell has been following. that was up 0.1. go back quite a long way to find what i'm looking here -- let's say back to october 2020. this is the core services x housing. year over year on that i can give you as well. that came in at -- let's see -- 3.39. which is really heading down from where it was. you had a good, real spending. 0.3. so the question was whether or not the consumer was giving it up here. take out the inflation component of it, and look at real spending, pretty good. income as rick also pointed out, was quite good. so now you've got this count that you're doing. right? which is, april and may pretty good. we'll see june come in before the july meeting. and then it looks like the economy is back on track. one other mention. 2.6 on the core rick told you about, year over year, is below where the median fed forecast is for the year for pce. core. >> right. steve, before we

over to steve liesman. did it happen, steve? >> just coming across the wire here.st rates by 25 basis points. deposit facility goes 375. goes to 375 from 4. main, marginal goes from 4 to 4.5 and main refinancing rate should go to 4.25 from 4.5. we'll leave that right there, joe. the question becomes, whether or not this is a hawkish cut. in other words, do we get, from christine lagarde later this morning in the press conference, happens at 8:45, additional guidance about more as we come meeting by meeting. first cut by the european central bank since senptember 2019. the first market bank to cut after switzerland and canada and the question we ask this morning is this the end of this inflationary period been through, end of these high rates, beginning of a global easing cycle with the big question whether or not the federal reserve gets onboard. a chance to talk about that i think at 8:30 and after that, joe. >> probably worth pointing out quickly. look at the euro again. immediate reaction at least was one that was no change basically. this was such a widely tele

steve liesman has the numbers right now. >> yeah. joe, 152,000. out there. a little below the estimate for the payroll on friday. 152,000 with all of the jobs, bulk of jobs in sfervice sector. just 3,000 in the goods sector. deline in manufacturing jobs. april adp revised slightly from 192 to 188. not doing a bad job, joe. errors between 48 and minus 25. plus or minus 50. in that range. how we got there. small business down 10,000. medium-sized businesses up almost 80,000, and large business 100,000. looking at it by industry trade transportation up 55 educational services where we see a lot of jobs on the report as well. up 46. construction up 42. leisure and hospithospitality, 20,000. interesting movements in annual pay. 5%. still on the high side, but unchanged from last month. job changers up 7.8%, down from almost 9% or above 9% prior month. down second month in a row. leave it there, guys. see what it says about whether or not this suggesting maybe a lighter bls number on friday. but been in the range, joe. this adp number. >> it is, steve.

steve liesman joins us now and shows the answer that is somewhere between the end of the year and maybeg to hit a 2% target is proving to be harder, still. an analysis of an inflation path shows the economy has to be lousy or perfect for the fed to hit the target with even a slight permanent rise of the prepandemic level, the fed may never hit the target and that creates a series of hard choices for the central bank. average core inflation running from .13 to .14 annually, and then by contrast, you can see the low in the period during the cite financial crisis, .09. we modeled recession, and it would drop inflation to around the 2% target at the end of the year, at the prepandemic average at 4.15, it would take us until the end of the year. but the fed never gets there. of course, there are those who say we are just not going back to the prepandemic world because of deglobalization, tariff wars and government spending and high labor cost that might continue. the fed choices in that world include keeping rates high and even hiking and causing a recession to get there, and only modest cut

steve liesman, cnbc.t wondering if you could walk me through the committee's average inflation forecast. core pce is now forecast to be 2.8% by the year-end. it's already 2.75 and after today's number there were several forecasts on the street that it would be 2.6 at the end of this month. does that tell you that the average official expects no further progress in inflation and in fact that it is going to get worse? and if you have this wrong, doesn't it mean you sort of, you could have wrong the outlook for rates there? >> yes. so what's going on there is that we had very low reads in the second half of last year june through december really and we're now lapping those. so as you go through the 12 month window a very low reading drops out and a new reading comes in. the new reading gets added to the 12 month window. it is just a slight element of conserve conservativism we're assuming a certain level of you know, incoming monthly pce and core pce numbers. we're assuming a good but not great numbers. if y

my friend, steve liesman is here. lizz winstead, cocreator of the daily show. she is also the cocreator. pablo torre, host of the public toray podcast. and to ray, host on thegrio. we look at this week you have president biden talking about freedom and the fight against tyranny, both 80 years ago and today, and then you have donald trump talking about how revenge is justified. liz, talk to us about where these two campaigns are and where they appear to be headed? >> tyranny of the past and tyranny of the present is basically what we are talking about. where are they heading? sometimes i honestly look at these two things and i think will the selection simply come down to will trump have more disillusioned people that won't show up or will biden have more dissolution people that won't show up? and that scares me. because i feel like for those of us doing the work, in the streets every day defending people's freedoms, if trump wins again, what we are facing is no dissent. and with no dissent we cannot challenge any of it. >> but, if he wins again there is no surpr

steve liesman is here on what it means for the fed going into next week.e chance of two rate cuts, but most likely in november and december. here are the number, blowing out of the top stop. unemployment ticking up above 4%. and the 3.9%, going to 4.1% on the wages, that got rid of the improvement we saw last month. moving on to -- now what was also gone is the concern that a slowing in the economy. health care surging ahead, we expected that rebound, but we thought we were done with leisure and hospitality. construction is surging ahead, too. at the same time, sara, the divergence, a bit of a head scratcher. total jobs ran together, but then they split and the gap has gotten wider. the gap is now the widest on record, going back to 1994, more than 4 million jobs. over time they tend to come together, haven't so far. the payroll is tub to annual revisions, but it's clear that the market is taking the could you from the strength of the payroll survey. and it makes the possibility of cuts later this year more of a hope. sara, i fact checked lael brainard. th

we'll get to steve liesman. hey, steve. >> yeah.t, who is a voter. he says conditions will likely call for a cut in the fourth quarter. that's what he said in the past. he goes on to say inflation is, quote, moving in the right direction and recent reports push against the idea that inflation progress is stalling. he sees, quote, a few promising signals. still expects a slower progress towards 2%, the 2% inflation target this year compared to last year hitting the target in 2025 or a bit later he says. he supports reducing rates before inflation gets to the 2% target, and he supports cutting rates, quote, once i gain additional confidence. he's looking for declines in housing and service price inflation and sees good news in that service price number. orderly deceleration in the economy and saying the slowing is occurring in labor markets as well. carl and sara, just to your point, sara you were absolutely right to high light that durable goods report. inside that the capital spending number was negative that feeds into gdp and add

g goolsbee, there was a tense moment with steve liesman where it was basically, stop asking me -- >>. i understand when you're in a follow-up with a law firm and the law firm is saying, we don't think you should be involved in this, you know, in the under armour suit that cost them an unbelievable amount of settlement, and you're supposed to say, well, hypothetically, let's say i was involved with kevin plank -- no. this is not a court of law, for heaven's sake. i think those conversations don't give you the clues that you would like, because the fed's dependent on the data, so let's look at the data. right now, there was a very good moment in the discussion. what do you do when you -- every time you raise interest rates, it makes it so that housing prices aren't coming down? i think the main problem with the housing companies is they got so much religion. they understood, look, our focus should be gross margins, and if the gross margins aren't going up, invest it somewhere else. and the toll quarter was amazing. len lennar quarter was not as good because they didn't make as much mon

steve liesman spoke with cleveland fed president loretta mester today first on cnbc.way out. >> yeah. she had thoughts about the next few months and i'll get to it that are kind of interesting. cleveland fed president, first fed official to speak after this week's meeting welcomed progress on inflation and suggested the economy be back on track to the declines in inflation we saw last year. >> we've been working hard to get inflation down. we've been restrictive on our monetary policy. we've seen really good progress over the last couple years on inflation. we're not there yet. but you have to look at the whole, you know, group of data and be happy that we're starting to see inflation move back down again after stalling a bit in the first part of the year. >> the comments coming after in port prices surprised to the downside. the first positive inflation out of three this week. as inflation falls or inflation adjusted funds rate rises. the fed becomes more restrictive without moving rates. mester said the fed would be moving before it achieves the 2% target. >> we've

steve liesman is in d.c. getting ready for the decision and news conference.report restores optimism for not just one but multiple fed rate cuts this year and could influence the color of jay powell's press conference this afternoon. here's a couple of takeaways i took. it supports the temporary view of surge in inflation i had in the first quarter. it's just that progress continues for a second straight month bringing it down. still unlikely enough to guarantee any cuts this year but it's a start and keeps september alive. here's the fed funds futures we're looking at, jumped up to 72 from 55 from september, 84 for november, and december at 96%. take apart the december funds. shows a chance of no cuts, a couple of scrooges there, 23% of one cut but a 75% probability now of two cuts and even some guys taking a flyer, 30% probability of three cuts built into the futures market there. the cpi was good no matter how you cut it. energy down, that's going to go up and down, we don't care about that. core goods the goose egg there. and did it all with housing not sh

pce the fed's favorite inflation gauge, our economics reporter steve liesman joins us with three scenarioslysis of possible inflation path over the next year shows the economy has to be lousy or absolutely perfect to hit that target. with even a slight rise of monthly inflation from the prepandemic level the fed may never hit the target creating a series of hard choices percent krpg. history, average monthly core pce ran 0i po 1 to.014. saw monthly inflation double to 3.4% on average, kroer pce. contrast in the period of the great financial crisis 0.9%. we modelled that recession like core pce and found it would drop inflation to around the 2% level year over year at the end of 2024. go back to the prepandemic level of 0.15 your middle scenario until the spring of 2025, the fed could start cutting several months before that. if we do 0.2%, just a few hun dreads of a point higher the fed never gets there. there are those who say we are not going back to that prepandemic level because of de globalization, tariff wars and government spending and high labor costs. fed choices in that world inc

let's get to steve liesman with the consumer and this is tricky to figure out what's going on with the> it sure is, but our cnbc retail monitor shows the consumer, sara, bouncing back strongly in may after a fairly average or lackluster april boosting spending, and several discretionary sectors are countering the story of weakening in the economy. we use real credit card spending data from affinity solutions and it shows may spending and gas rising by 1.4% compared to just a 0.3% in april. there was a minus number in april. that takes out food service rising by 1.2% versus 0.4% in april, the year over year up 3% as well. breaking it down by sector though, you can see the non-store retailers. those are your online folks that were really strong, but so are restaurants and bars and food and beverage. clothing can accessories, over 1%, almost 1.5%, and general merchandise stores as well. building and garden supplies minus 0.6%. this is the strongest of the 20 months we've tracked this data, and it's unclear if it's a rebound from april, or maybe the start of a renewed consumer spending spr

get to steve liesman joining us with a special guest. hi, steve. >> hey, good morning, becky. yes.ee, president of the chicago fed. good morning, officer >> hey, steve, how are you? >> great. listen, start off with the, getting a tally here. where are we on the countdown to cuts? are we, is it 3-2? what's the score here? >> well, who's on which team? you know i'm not allowed to talk for anyone else on the fomc. i know you're not asking me that. >> in your assessment. >> look, my assessment is -- we've been laying out-didn't i've been laying out for more than a year what are the t criteria? somewhat historic restrictiveness. the real fed funds rate highest in decades. when you want to be that restrictive, is when you feel like there's danger of overheating, or as we did in the u.s., if you get the inflation rate up too high. second half of last year, we had outstanding dual mandate performance's that is, inflation came down almost as much as we've seen in any year and we do not have the a recession. start of the year saw inflation kicking back up and trying to figure out and determi

let's get over to steve liesman.ata. steve, what are you thinking? >> i think it's a potentially very important report, becky, there has been concern about the consumer slowing and rick was absolutely right to focus on those revisions, because it changes what we thought happened in the past. the zero going to the control group, i'm not sure what happened to gdp in that part of it, but the revisions will bring down this sense that we had a pretty robust quarter underway. the thailand fed gdp has not been updated since june 7th. we'll have industrial production and inventories, as well. on the other side of 10:00, we should check back in. we were looking at a 3.1% gdp number. i'm thinking that number is going to be coming down as a result of this date and this warning. and once again front and center will be this notion of just how robust is the consumer here. people have been waiting for this slowdown. we seem to have two months in a row here of a weaker consumer. so it is worth paying attention to this, becky. and no

our senior economics reporter steve liesman joins us right now. he has the results on that.becky. yeah, the american consumer bouncing back strongly in may after a lackluster april. boosting spending in several discretionary sectors, and really countering the narrative of a weakening economy. the cnbc nrf retail monitor uses real credit card spending data from affinity solutions shows may spending ex auto and gas rising by 1.4% compared to 0.3 in april. year-over-year it's up 3% compared to a negative number in april. core retail sales, that is food services as well as auto and gas, rose 1.2 versus 0.4 in april. the year-over-year up 3% versus a slight negative in april. it's the sector breakdown that's remarkable. non-store retailers powering up by 2%, restaurants and bars 2%. food and beverage strong, clothing and accessories, sporting goods and general merchandise also strong, gas stations were negative and building and garden supplies negative as well. they've been negative for a while there. this is the strongest of the 20 months we've tracked this data, and it's unclea

steve liesman looking through the numbers, too, and joins us with a special guest. >> quick, waiting say this is it. not unusual because of the strength of the dollar, to see some effect inside the import prices where we would be, have to have a positive effect on the inflation outlook. and now after that, we have our special guest joining us now. cleveland fed president loretta mester. president mester, thank you so much for joining us. >> thanks for having me. >> it's been probably ten years we've been talking since you've been president that you are about to end your tenure at president at the cleveland fed. but let's start now with the short-term and then get to the long-term stuff. >> okay. >> we've had a couple inflation reports this week. how did you process them? >> hmm. no. it was welcome news. it was great news on the last foc i attended. wasn't it? look, we've been working hard to get inflation down. we've been restrictive on our monetary policy. we've seen really good progress over the last couple years on inflation. we're not there yet, but you have to look at the, you k

get steve liesman at least to start with sdecipheration? >> what is that? >> decipher numbers. begin some of the decipheration. i'm going to look that up. if it's not, should be. >> look it up, joe. you're a wordsmith. i'll go with you on it. i don't know if rick's still there. i can't find, whatever reason the number i'm looking for, which is the capital goods investment x aircraft. a caution on the -- >> minus 0.6. minus 0.6 of a percent. >> what i was looking for. thank you very much, rick. i want to talk about this issue, joe, which i have been talking about several months earlier. which is we have rifts in the economy no apparent weaknesses. i'm afraid some weaknesses are showing up. jobless claims number bugs me a little, because juneteenth last week and that could have an effect on these jobless numbers because it happened middle of the week. 25% of people still use the phone or go in-person to get jobless claims. rick, correctly he made a point about the continuing claims being on the rise here. so we need to watch that. the capital goods shows perhaps that, the capital