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Weekly economic review & outlook Supply-side constraints are having an impact

June 21, 2021

You Need to Know

Week in review

Retail spending weaker for May

Total sales fell modestly for May, helped by supply constraints that have limited new light vehicle production. But upward revisions to prior months suggest that the trend in spending remains solid.

No policy move in June, but the Fed shifts forward its tightening timeline

The median federal funds rate forecast from FOMC participants sees two rate hikes in 2023 for the first time as the Fed projects a stronger recovery. And it is finally talking about talking about tapering.

Week Ahead


Weaker new and existing home sales expected for May

Reflecting continued supply limitations and rising prices, both new and existing sales are projected to decline modestly for May – although still at elevated levels.

Another rise in core inflation projected

The year-over-year change in the core PCE price index should increase to 3.4 percent for May, but this is likely the near-term peak for inflation readings.

Retail sales declined by 1.3 percent for May as topline spending was again weaker than expected. But there were significant upward revisions to March and April that point to a stronger trend pace of expenditures – and perhaps to upward revisions for the May data, as well. A pickup in spending at restaurants and clothing stores was likely influenced by the fuller reopening of in-person activities across the country. Despite May’s decease, retail sales were still up by more than 28 percent over the past year and have far surpassed pre-COVID levels on the back of the successive stimulus payments this year.