Evelyn Reynolds

Headline inflation in the euro area dipped to 2.5% in June, the European Union’s statistics agency said Tuesday, in line with analyst expectations.
Core inflation, excluding the volatile effects of energy, food, alcohol and tobacco, stayed at 2.9% from the prior month, narrowly missing the 2.8% analyst forecast.

Headline inflation in the euro area dipped to 2.5% in June, the European Union’s statistics agency said Tuesday, while the closely watched core and services prints held steady.
The headline figure was in line with the expectations of economists polled by Reuters. Inflation had nudged up from 2.4% in April to 2.6% in May.

Core inflation, excluding the volatile effects of energy, food, alcohol and tobacco, stayed at 2.9% from the prior month, narrowly missing the 2.8% economists had forecast.
The rate of price rises in services also failed to budge, holding at 4.1%.

Investors will now parse what the latest data means for the trajectory of interest rates in the 20-nation euro zone, following the European Central Bank’s initial 25 basis point cut in June.
Volatility in the consumer price index has long been expected this year, as choppy base effects from the energy market unwind.
In June, year-on-year energy inflation in the euro zone was 0.2%, a sharp switch from earlier in the year when the sector had a strong disinflationary pull.

On Tuesday, ECB Vice President Luis de Guindos told CNBC’s Annette Weisbach that, while the central bank was confident that inflation would converge to its 2% target, the coming months would be a “bumpy road” and there is no “predetermined path” for monetary policy. He was commenting on the sidelines of the ECB Forum on Central Banking in Sintra, Portugal.

Money markets see a high likelihood of another two interest rate trims of 25 basis points each across the ECB’s remaining four meetings this year, according to LSEG pricing data. They price only a 33% chance of a follow-up cut this month.
The euro, which has struggled in recent weeks under the shadow of political risk from the upcoming French elections, was slightly lower following the data release. It was down 0.2% against the U.S. dollar and 0.05% lower against the British pound at 10:30 a.m. London time.
Kyle Chapman, FX markets analyst at Ballinger Group, said that beyond a slight cooling in food prices — with unprocessed food inflation falling to 1.4% from 1.8% — overall, the latest consumer price index was a “virtual repeat of the May data.”
“That’s enough to set in stone a pause at this month’s ECB meeting. The stickiness in services inflation may start to become a real concern for policymakers that puts a spanner in the works for rate cuts, particularly given the backdrop of rising wage growth and falling unemployment,” Chapman said in a note.
“There has been no concrete downtrend in services inflation this year, and the ECB isn’t likely to cut rates significantly until one emerges.”
The interest rate outlook will be dependent on the quarterly ECB staff macroeconomic projections, and whether they move higher, Chapman added.
In June, ECB staff raised their annual average headline inflation outlook for 2024 to 2.5% from 2.3%, also lifting their 2025 forecast to 2.2% from 2%.
Correction: This article has been updated to more accurately reflect the rise in inflation from April to May. More

The Zeta Economic Index, launched Monday, uses generative AI to analyze what its developers call “trillions of behavioral signals” to score growth on both a broad level and for stability.
In June, both measures had good news, with the economic score at 66 and the stability index at 66.1.

David A. Steinberg, CEO of Zeta Global Holdings, at the New York Stock Exchange.
Source: NYSE

Measuring the strength of the sprawling U.S. economy is no easy task, so one firm is sending artificial intelligence in to do the job.
The Zeta Economic Index, launched Monday, uses generative AI to analyze what its developers call “trillions of behavioral signals,” largely focused on consumer activity, to score growth on both a broad level of health and a separate measure on stability.

At its core, the index will gauge online and offline activity across eight categories, aiming to give a comprehensive look that incorporates standard economic data points such as unemployment and retail sales combined with high-frequency information for the AI age.
“The algorithm is looking at traditional economic indicators that you would normally look at. But then inside of our proprietary algorithm, we’re ingesting the behavioral data and transaction data of 240 million Americans, which nobody else has,” said David Steinberg, co-founder, chairman and CEO of Zeta Global.
“So instead of looking at the data in the rearview mirror like everybody else, we’re trying to put it out in advance to give a 30-day advanced snapshot of where the economy is going,” he added.

The eight verticals the economic index uses include automotive activity, dining and entertainment, financial services such as credit line expansion, health care, retail sales, technology and travel.
For the stability measure, the index will look to gauge consumers’ ability to handle gyrations in the economy.

Together, the goal is to provide something more expansive than gross domestic product and similar measures to gauge growth.
In June, both measures had good news, with the economic score at 66 and the stability index at 66.1. Respectively, the two readings correspond to “active” and “stable” regarding the health of the economy.
“This is maybe a more holistic way of really predicting the economy because not only are you taking the existing economic indicators around GDP, employment, all the different reporting that comes down on different vertical sales, you’re layering on top of it,” Steinberg said.
“We’re really looking at what they’re actually spending. We’re looking at what they’re actually reading and researching,” he added. “We’re seeing all of that information, which allows us to build a better forecast.”

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Ruth Monrroy parks her metal cart on Hollywood Boulevard in Los Angeles six days a week.Adam Perez for The New York TimesKurtis Lee and Growing up in Guatemala, Ruth Monrroy often spent time at her mother’s restaurant watching in awe of how she connected with customers.“I knew I wanted to have my own business,” Mrs. Monrroy said on a recent weekday afternoon on Hollywood Boulevard, where her childhood wish has come true.Mrs. Monrroy, 44, parks her metal cart in front of the TCL Chinese Theater six days a week, selling items including fruit salad, hot dogs and energy drinks.“Mango, water, soda, Gatorade, hot dog!” she calls out to the crowds traipsing over Hollywood Walk of Fame stars dedicated to Bruce Willis and Billy Crystal.Street vending is a quintessential California job — from the pickup trucks selling cartons of strawberries next to fields near Fresno to the pop-up stands offering carne asada tacos along Oakland thoroughfares. In Los Angeles alone, an estimated 10,000 street vendors sell food.Until recently, vendors along Hollywood Boulevard were operating outside the law. And while that legal cloud has lifted, eking out a living remains a challenge. Cost-conscious tourists sometimes scoff at the prices, even if sellers struggle to break even. And while longtime street vendors respect and recognize the turf of other regulars, there are more sellers working in the area, and competition has increased.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The Financial Action Task Force removed Turkey from its “gray list” of countries that need special monitoring, handing a major vote of confidence to the country in the midst of its economic turnaround efforts.
The FATF in its 2021 report had found sectors like banking, construction and property in Turkey vulnerable to illicit financing of groups like the Islamic State and al-Qaeda.

As the sunsets, a ferry boat glides across the waters of the Golden Horn with the Suleymaniye Mosque and the city of Istanbul, Turkey in the background. 
Vw Pics | Universal Images Group | Getty Images

The Financial Action Task Force, an international watchdog organization dedicated to combating money laundering and illicit cash flows, on Friday removed Turkey from its “gray list” of countries that need special monitoring, handing a major vote of confidence to the country in the midst of its economic turnaround efforts.
“The FATF welcomes Türkiye’s significant progress in improving its AML/CFT regime,” the Paris-based organization wrote in its latest report, using the Turkish government’s spelling of its country’s name and the acronym for anti-money laundering and combating the financing of terrorism.

It said that Turkey had strengthened the effectiveness of its AML/CFT regime to address “deficiencies” that FATF listed in its October 2021 monitoring report.
Those deficiencies included FATF concerns over unregistered money transfer services, insufficient resources dedicated to terrorist financing investigations, alleged involvement in sanctions evasion, lack of oversight on high-risk sectors used for money laundering such as banking and real estate, and insufficient oversight of nonprofit organizations that could be used for terrorist financing, among others.
The FATF in its 2021 report had found sectors like banking, construction and property in Turkey vulnerable to illicit financing of United Nations-sanctioned groups like the Islamic State and al-Qaeda.

The watchdog organization concluded in its 2024 findings that Turkey is “no longer subject to the FATF’s increased monitoring process,” but that it “should continue to work with the FATF to sustain its improvements in its AML/CFT system, including by continuing to ensure its oversight of the NPO [nonprofit organization] sector is risk-based and in line with the FATF standards.”
Turkey’s government welcomed the news, its finance minister, Mehmet Simsek, writing on social media platform X, “We did it,” alongside a Turkish flag emoji as the decision was announced, according to a Google translation from Turkish.

Turkish Vice President Cevdet Yilmaz said: “With this development, international investors’ confidence in our country’s financial system has become even stronger. The decision will have extremely positive consequences for the financial sector and the economy.”
The FATF’s announcement will likely come as a boost to Turkey’s economic turnaround efforts after years of high inflation, a depreciating local currency and inconsistent foreign investment levels.
Mohamed Daoud, industry practice lead at Moody’s ratings agency, described the positive impact the new designation is likely to have.
“Turkey’s removal from the Financial Action Task Force (FATF) Grey List recognizes the significant progress made by the Turkish government and various economic sectors in strengthening their fight against money laundering and terrorist financing,” Daoud said.
“This development is expected to boost Turkey’s reputation internationally, potentially boosting foreign investment and relationships with European and U.S. institutions.” More

The economy appears to be downshifting and price gains are moderating, as Federal Reserve officials creep closer to beating inflation.The Federal Reserve’s preferred inflation measure continued to cool as consumer spending grew only moderately, good news for central bankers who have been trying to weigh down demand and wrestle price increases under control.The Personal Consumption Expenditures index climbed 2.6 percent in May from a year earlier, matching what economists had forecast and down from 2.7 percent previously.After stripping out volatile food and fuel prices to give a better sense of the inflation trend, a “core” price measure was also up 2.6 percent from a year earlier, down from 2.8 percent in the April reading. And on a monthly basis, inflation was especially mild, and prices did not climb on an overall basis.The Fed is likely to watch the fresh inflation data closely as central bankers think about their next policy steps. Officials raised interest rates sharply starting in 2022 to hit the brakes on consumer and business demand, which in turn can help to slow price increases. But they have held borrowing costs steady at 5.3 percent since July as inflation has slowly come down, and have been contemplating when to begin lowering interest rates.While officials went into 2024 expecting to make several rate cuts this year, they have pushed those expectations back after inflation proved stubborn early in the year. Policymakers have suggested that they still think they could make one or two rate cuts before the end of the year, and investors now think that the first reduction could come in September.Given Friday’s fresh inflation data, the sticky inflation early in 2024 looks “more and more like a bump in the road,” Omair Sharif, founder of Inflation Insights, wrote in note after the release. “However you want to slice and dice it, we’ve made considerable progress on core inflation over the last year.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Interest in everything related to Western fashion is driving up demand for denim clothing such as skirts and dresses, according to San Francisco-based Levi Strauss.
The frenzy comes as Western wear has gained a groundswell of cultural support that’s caught the attention of the consumers, not to mention the retailer’s chief executive and Wall Street.

A Levi’s store at the Orlando Vineland Premium Outlets in Florida.
Jeff Greenberg | Universal Images Group | Getty Images

In a lyric on her latest album, Beyoncé sings “denim on denim, on denim, on denim.”
Levi Strauss shoppers are taking that advice to heart. Levi Strauss executives are ecstatic.

Western wear is booming as consumers opt for top-to-bottom denim looks, the iconic, 171-year-old clothing maker said on Wednesday. As the style wins cultural favor, its popularity is juicing denim niches — like shirts, skirts and dresses — that fall outside Levi’s widely-known blue jean offerings.
“The growing popularity of Western wear is at an all-time high,” CEO Michelle Gass told analysts Wednesday night after the California-based retailer’s latest earnings report for the quarter ended in May.
A Western renaissance has been gaining traction over the past several months, sending stylish shoppers searching for pieces like jeans, boots and cowboy hats. Levi’s scored a huge hit when its jean brand was referenced in Beyoncé’s song “Levii’s Jeans,” released earlier this year.
Beyond Beyoncé’s chart-topping “Cowboy Carter” album, the increased ubiquity of Western style has also been tied to a fashion line unveiled by Louis Vuitton earlier this year and Taylor Swift’s ongoing Eras Tour.

Read more CNBC analysis on culture and the economy

Gass, who took over as Levi Strauss CEO earlier this year after previously serving as the CEO at Kohl’s, has touted that denim is having a moment in the popular imagination, with Western wear trending more broadly throughout the culture.

More specific data shared on the company’s earnings call Wednesday showed how Levi Strauss is taking advantage of demand for denim beyond its popular “501” jeans. Sales of denim skirts, jumpsuits and dresses all at least doubled in the latest quarter, Gass said. Western shirts sales are also up significantly, she said, especially on the women’s side.
Levi is find success in what the 55-year-old chief executive described as a new strategy of trying to dress customers denim — from head-to-toe.
“Our new focus is, yes, continuing to own jeans, but taking that denim top to bottom,” Gass said on CNBC’s “Mad Money” late Wednesday. While noting that the denim skirt and dress categories haven’t been historically large for the company, now “they’re exploding,” she said.

Denim rage sets a high bar on Wall Street

To be sure, the well-documented denim craze alone isn’t necessarily impressing Wall Street. Levi Strauss tumbled more than 15% on Thursday in response to its latest numbers, its second worst day since going public in early 2019.
Levi Strauss posted $1.44 billion in revenue in the fiscal second quarter, slightly missing the $1.45 billion consensus forecast of analysts polled by LSEG despite the denim boom. The company’s finance chief told CNBC that the sales miss was driven by unfavorable foreign exchange rates and weakness in the Dockers brand.
On the other hand, Levi Strauss earned 16 cents per share, excluding items, ahead of the 11-cent average estimate by analysts.
In the year through Wednesday, shares had run up amid the buzz around the cotton-based fabric and the resurgence of Western clothing. Following Thursday’s drop, the stock is still up more than 18% on the year. For comparison, shares of Kontoor Brands, the parent of denim brands Wrangler and Lee, have risen 5% year to date.

Stock chart icon

Levi Strauss, year to date

Wells Fargo analyst Ike Boruchow said that for “one of the most crowded longs in the space today,” Levi’s second-quarter release “was simply not good enough.” In other words, the company missed what was an admittedly high bar, he said.
Citigroup analyst Paul Lejuez, meanwhile, thought Levi’s most recent quarter was good, but cited the wholesale business’s performance and the potential for European sales to continue struggling in the second half of the year as grounds for concern.
Lejuez pointed to several tailwinds as grounds for optimism on the stock. Two of his reasons driving excitement — new styles and fits — are common for a clothing maker.
Lejuez’s final one was more unique: Beyoncé.
— CNBC’s Gabrielle Fonrouge and Julie Coleman contributed to this report

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A customer shops at a Safeway store on June 11, 2024 in San Francisco, California.
Justin Sullivan | Getty Images

An important economic measure for the Federal Reserve showed Friday that inflation during May slowed to its lowest annual rate in more than three years.
The core personal consumption expenditures price index increased just a seasonally adjusted 0.1% for the month and was up 2.6% from a year ago, the latter number down 0.2 percentage point from the April level, according to a Commerce Department report.

Both numbers were in line with the Dow Jones estimates. May marked the lowest annual rate since March 2021, which was the first time in this economic cycle that inflation topped the Federal Reserve’s 2% target.

Including food and energy, headline inflation was flat on the month and also up 2.6% on an annual basis. Those readings also were in line with expectations.
Outside of the inflation numbers, the Bureau of Economic Analysis report showed that personal income rose 0.5% on the month, stronger than the 0.4% estimate. Consumer spending, however, increased 0.2%, weaker than the 0.3% forecast.
Prices were held in check during the month by a 0.4% decline for goods and a 2.1% slide in energy, which offset a 0.2% increase in services and a 0.1% gain for food.
However, housing prices continued to rise, up 0.4% on the month for the fourth straight time. Shelter-related costs have proven stickier than Fed officials have anticipated and have helped keep the central bank from reducing interest rates as expected this year.

Stock market futures were modestly positive following the report while Treasury yields were negative on the session.
Investors have been trying to handicap the Fed’s intentions on rates this year and have had to scale back expectations. Whereas traders earlier in 2024 had been expecting at least six rate cuts this year they are now pricing in just two, starting in September.
“The lack of surprise in today’s PCE number is a relief and will be welcomed by the Fed,” said Seema Shah, chief global strategist at Principal Asset Management. “However, the policy path is not yet certain. A further deceleration in inflation, ideally coupled with additional evidence of labor market softening, will be necessary to pave the way for a first rate cut in September.”
The Fed targets 2% inflation and began raising interest rates in March 2022 after a year of dismissing rising prices as transitory effects from the Covid pandemic that likely would fade. The central bank last raised rates in July 2023 after taking its benchmark overnight borrowing level to a range of 5.25%-5.5%, the highest in some 23 years.
Recent economic data has painted a picture of an economy that has withstood the Fed’s aggressive monetary tightening. Gross domestic product rose at a 1.4% annualized rate in the first quarter and is on pace to increase 2.7% in the second quarter, according to the Atlanta Fed.
There have been some slight cracks in the labor market lately, with continuing jobless claims hitting their highest level since November 2021. However, the unemployment rate is still 4%, low by historical means though also rising at a slow pace.
This is breaking news. Please check back for updates. More

The personal consumption expenditures price index, an inflation measure the Federal Reserve watches closely, is expected to show little, if any, monthly increase for May.
When stripping out volatile food and energy prices, the core PCE price index is set to indicate its lowest annual reading since March 2021.
The Commerce Department releases the inflation readings, along with reports on personal income and spending, Friday at 8:30 a.m. ET.

People purchase beverages in a store on a sweltering afternoon in Brooklyn, New York, on the first day of summer on June 21, 2024.
Spencer Platt | Getty Images

There could be some pretty good inflation news on the way from the Commerce Department when it releases a key economic report Friday.
The personal consumption expenditures price index, an inflation measure the Federal Reserve watches closely, is expected to show little, if any, monthly increase for May, the first time that would be the case since November 2023.

But even more importantly, when stripping out volatile food and energy prices, the core PCE price index, which draws even closer scrutiny from Fed policymakers, is set to indicate its lowest annual reading since March 2021.
If that date rings a bell, it’s when core PCE first passed the Fed’s coveted 2% inflation target during this cycle. Despite a series of aggressive interest rate increases since then, the central bank has yet to wrest the pace of price increases back into its target range.
The official Dow Jones forecasts for Friday’s numbers are for the headline, or all-item, PCE price reading to come in flat on the month, while core is projected to rise 0.1%. That would compare to respective increases of 0.3% and 0.2% in April. Both headline and core are forecast at 2.6% on a year-over-year basis.
Should the core PCE price forecasts transpire, it will serve as a milestone of sorts.
“We are in line with [the forecast] that the PCE core pricing data will come in soft,” said Beth Ann Bovino, chief economist at U.S. Bank. “That’s good news for the Fed. It’s also good for people’s pocketbooks, although I don’t know if people feel it just yet.”

Indeed, while the rate of inflation has receded precipitously from its mid-2022 peak, prices have not. Since that March 2021 benchmark, core PCE is up 14%.
That steep climb and its pernicious effect is why Fed officials are not ready to declare victory yet, despite the obvious progress made since the rate hikes began in March 2022.
“Returning inflation sustainably to our 2% target is an ongoing process and not a fait accompli,” Fed Governor Lisa Cook said earlier this week.
Cook and her colleagues have been circumspect about the timing and pace of rate cuts, though most agree that easing is likely at some point this year as long as the data stays in line. Futures markets are currently pricing in a good likelihood that the Fed will enact its first quarter-percentage-point cut in September, with another to follow by the end of the year. Policymakers at their meeting earlier this month penciled in just one cut.
“We do expect softening in the real economy — not falling off a cliff, just softening — that suggests that inflation will be softer as well later on. That gives us reason to expect the Fed will be able to likely have their first cut in September,” Bovino said.
“Now we all know it depends on the data and the Fed is still watching,” she added. “Could they wait? Could it just be a one and done this year? I can’t rule it out. But it does look like the numbers might give the Fed cover to cut rates two times this year.”
In addition to the inflation numbers, the Commerce Department at 8:30 a.m. ET will release figures on personal income and consumer spending, with estimates at a rise of 0.4% and 0.3%, respectively.

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