According to BlockBeats, on August 15, the U.S. Bureau of Labor Statistics (BLS) released a report on Thursday showing that the wholesale price increase in July far exceeded expectations, boosted by soaring profit margins, which may indicate that inflation remains a threat to the U.S. economy. Service inflation is the main factor driving the overall PPI increase, with service prices rising by 1.1% in July, the largest increase since March 2022.
The report shows that despite weak demand in the first half of this year, companies are adjusting the pricing of goods and services to help offset costs related to increased tariffs in the U.S. How much of the tariff costs businesses pass on to consumers will be a key factor influencing future interest rate trends.
Due to Trump's policies, especially the economic uncertainty brought by tariff policies, companies have reduced the number of new employees they hire. However, the relatively low initial claims indicate that employers are not laying off workers on a large scale. Earlier this week, the July CPI report was largely in line with expectations, leading the market to almost firmly believe that the Federal Reserve will lower key interest rates in September. After the latest U.S. economic data was released, traders reduced their bets on the Fed cutting rates in September.
Meanwhile, some analysts are still downplaying the significance of last month's weak employment data, believing that the slowdown in the labor market is due to a weakened labor supply caused by Trump's immigration policies. If this is the case, then Powell's inaction is correct, as lowering interest rates has no effect on the weakened labor supply.