Inflation cools, but Americans aren’t buying it

**Inflation Slows Down, But Americans Remain Skeptical**

Recent data shows inflation in the U.S. is cooling, with the annual rate dropping to 3.4% in April from 3.5% in March. Core CPI, which excludes food and energy, fell to 3.6%, the lowest since April 2021. Despite this, many Americans doubt that the downward trend will continue.

Major retailers like Walmart, Target, Amazon Fresh, Ikea, and Aldi have reduced prices on thousands of items due to moderating inflation and cautious consumer spending. Walmart cut prices on nearly 7,000 products, while Target reduced prices on over 1,500 items, with more expected.

Even so, consumer confidence remains low. The Conference Board’s latest Consumer Confidence Index indicates that average 12-month inflation expectations rose to 5.4%, and 56.2% of consumers expect higher interest rates in the coming year.

Despite strong stock markets, robust corporate earnings, and historically low unemployment, many Americans still feel uncertain about the economy. High home prices and mortgage rates near 7% contribute to this sentiment, along with still-elevated food and menu prices.

Inflation concerns have also increased among investors. Charles Schwab’s second-quarter sentiment survey shows that 19% of respondents now see inflation as a primary concern, more than double from the previous year.

James Kostulias of Charles Schwab noted that traders started the year optimistic about the economy and potential Fed rate cuts, but inflation concerns have risen significantly. Wall Street is now looking ahead to the latest Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation measure, due on Friday.

Fed officials are cautiously optimistic. Fed Chair Jerome Powell stated that inflation remains too high to lower rates but acknowledged that long-term inflation expectations are stable. Meanwhile, Minneapolis Fed President Neel Kashkari believes more evidence of cooling inflation is needed before considering rate cuts.

**Senate Democrats Call for DOJ Probe into Big Oil**

Senate Majority Leader Chuck Schumer and nearly two dozen Democrats have urged the Justice Department to investigate the oil industry for alleged collusion and price-fixing. In a letter to Attorney General Merrick Garland, they expressed concern over allegations that a Texas oil executive tried to conspire with OPEC to raise oil and gasoline prices.

The letter calls for the DOJ to use all available tools to prevent and prosecute any collusion that has harmed American households and businesses by increasing fuel costs. It was signed by 22 senators, including Elizabeth Warren, Amy Klobuchar, Bernie Sanders, and Dick Durbin, following accusations from the Federal Trade Commission against a leading Texas oil producer CEO.

**Zero-Down Mortgages Return**

United Wholesale Mortgage has launched a new zero-percent down mortgage program, removing a significant barrier for many prospective homebuyers who lack the funds for a down payment. This program allows buyers to finance 97% of the home’s value with a first mortgage and covers the remaining 3% with a second mortgage, which doesn’t accrue interest but must be repaid in full upon sale, mortgage payoff, or refinancing.

While this program could help more Americans purchase homes, some experts are concerned about potential risks, especially if home prices stop rising. The initiative evokes memories of the subprime mortgage crisis that contributed to the 2008 financial meltdown.