US Inflation Stubbornness and Downgraded Consumption Constrain the Economy, Trump Prepares for Midterm Elections with Four Moves — W26 Overseas Macro Highlights
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In May, the US core PCE year-on-year rose to 3.4%, reaching a new high since October 2023, while PCE year-on-year increased to 4.1%, highlighting the stickiness of inflation. First-quarter GDP was revised up to 2.1%, but the consumption component was significantly reduced to 0.5%. There is a divergence between strong corporate investment and weak household consumption. The housing bill was passed by both parties, but Trump refused to sign it, demanding that the SAVE Act be passed first.
- Since the US and Iran signed a memorandum of understanding and entered negotiations, crude oil prices have continued to decline, and Trump is gradually shifting his focus to the midterm elections in November. Currently, his poll support rate continues to fall; it is expected that Trump will next push oil prices back down, optimize tariff policies, promote lower interest rates, and increase the real income of low-income groups.
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