Wall Street Journal (06/26/14) Eric Morath

U.S. inflation accelerated in May to its highest level in more than a year and a half, a development that could weigh on U.S. Federal Reserve officials as they debate when to raise interest rates. U.S. Department of Commerce officials confirm that the price index for personal consumption expenditures increased 1.8% last month from May 2013. That was not only the highest level since October 2012, it marked a sharp pickup from February when annual inflation stood at just 0.8%.

Wall Street Journal (06/26/14) Josh Mitchell

Weak consumer spending in May despite stronger income growth raises doubts about the economy’s underlying strength. Personal spending increased 0.2% in May from a month earlier, according to the U.S. Department of Commerce, entirely due to higher prices and following a flat reading in April. Adjusted for inflation, spending declined.

“This report seems to present the [U.S. Federal Reserve] with the dreaded conflict between its objectives: slower economic growth but faster inflation,” says economist Michael Moran of Daiwa Capital Markets America. “Consumer spending has hit an air pocket, but with the job market improving, activity should pick up.”

Federal Reserve Bank of Kansas City (06/26/14)

The Federal Reserve Bank of Kansas City’s June Manufacturing Survey shows slowing activity in the 10th District, with the month-to-month composite index falling from 10 in May to six in June. The production, new orders, employment, and new orders for exports indexes also decreased, while the order backlog index hit a seven-month high.

“We saw some moderation in factory growth in June and many contacts mentioned difficulties finding qualified workers,” says Chad Wilkerson, vice president and economist at the Kansas City Fed. “However, many respondents noted solid expectations for future months.”

Wall Street Journal (06/26/14) Ben Leubsdorf

Structural issues like skills mismatches between available workers and available jobs are causing a great deal of the weakness remaining in the U.S. labor market, according to Federal Reserve Bank of Richmond President Jeffrey Lacker. These problems are difficult for monetary policymakers to tackle, he said during a speech at Lynchburg College. The standard measure of unemployment may be overstating the health of the economy, and much of the slack in the market could be due to Baby Boomers retiring and young people choosing college over finding a job.

U.S. Department of Labor (06/26/14)

The U.S. Department of Labor has announced grants totaling $154.8 million awarded to 32 states, Puerto Rico, and the Cherokee tribal nation through the Job-Driven National Emergency Grant program. The funding will be used to train workers who lost a job through no fault of their own for jobs in high-demand industries. Funding will also be used to provide services, such as career coaching and counseling, as well as assisting with job placement that helps connect laid-off workers, including the long-term unemployed, with available jobs.