SUPPLY CHAINS AND LABOR MARKETS.
Goldman Sachs 6-23 [Goldman Sachs, leading global financial institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments and individual; 6/8/23, “Why a US recession has become less likely”, Goldman Sachs, https://www.goldmansachs.com/intelligence/pages/why-a-us-recession-has-become-less-likely.html DOA 6/26/23] nmui
While declines in inflation are still falling short of expectations, our economists point out that deceleration in inflation across a broad range of indicators is now a fact, not just a forecast, and prospects for further progress in the second half of 2023 also look promising. They forecast core PCE inflation to come down to 3.7% by December 2023, with sequential rates averaging 2.9% in the second half of the year.
They expect improving supply chains and declining used-car auction prices to bring down core goods inflation materially starting in June, following what is likely to be another used car price increase in the Consumer Price Index in May. Our economists also think the news on rent inflation remains encouraging, with signs that seasonally adjusted asking rents fell in May despite the rebound in house prices. And the rebalancing in the labor market should bring down core service inflation excluding shelter (although they expect progress to remain only gradual when it comes to shelter inflation).