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Investing Specialists

Tame Inflation Can Still Hurt Consumers

A tight labor market may not be sending prices as high as feared, but consumers will still feel the squeeze.

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This week had only two economic releases of much consequence: the Consumer Price Index and retail sales. The month-to-month data in both reports looked good and suggested an accelerating economy. Indeed, the GDPNow folks in Atlanta are now seeing the potential for 3.6% growth in the second quarter following the first quarter's disastrous 0.7% rate (which is likely to be revised higher).

The consensus forecast for the second quarter is for just over 3% growth, and we are forecasting between 2.5% and 3% for the quarter. However, we still think it will be exceptionally difficult to get above 2% growth for the full year.

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Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.