Solutions Economic and Market Watch

Join Antony Davies, director of economic research at CFC, as he explains why Harry Truman wanted a one-handed economist. 
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Antony Davies
Antony Davies is director of economic research at CFC. Visit his full bio at https://www.nrucfc.coop/content/solutions/en/author/antony-davies.html for more.

What is Solutions Economic and Market Watch?

Listen to the latest economic insights from CFC experts John Suter, Sam Kem, and Antony Davies.

Antony Davies:

Welcome to the Economic and Market Watch podcast for the week of June 20, 2026. This is Antony Davies.

Antony Davies:

Harry Truman famously said, "Give me a one handed economist. All my economists say 'on one hand,' 'but on the other.'"

Antony Davies:

Last week, the Bureau of Labor Statistics released a report that would annoy Truman. It was good news. It was bad news. But mostly, it was a reminder that the economy rarely moves in a single direction.

Antony Davies:

On one hand, the consumer price index was down four-tenths of a percent in June. That's the first decline since mid-2022. And excluding COVID, it's the largest one month decline in over a decade. The driving factor was a drop in energy prices. From May to June, the average price of a gallon of gas dropped 15%.

Antony Davies:

On the other hand, the price of food was up two-tenths of a percent. That's not great news, but it's better than the average three-tenths of a percent per month since December.

Antony Davies:

The wage side of the BLS report was also two-handed.

Antony Davies:

On one hand, real average hourly earnings were up eight-tenths of a percent. Real earnings are wages minus inflation, so that eight-tenths of a percent gain is actual purchasing power. On the other hand, inflation from tariffs and war have erased nine months of purchasing power gains, leaving inflation adjusted earnings unchanged versus September of last year.

Antony Davies:

Outside of the BLS report, household finance numbers tell a related story.

Antony Davies:

On one hand, household credit card debt has held constant since April, which means that Americans aren't paying for rising prices by taking on more debt.

Antony Davies:

On the other hand, apart from June 2022, when inflation was at its peak, Americans are saving less out of their paychecks than at any time since the 2008 financial crisis. As for jobs, on one hand, BLS says the unemployment rate fell to 4.2%. That's a twelve month low.

Antony Davies:

On the other hand, it says there are 507,000 fewer people working.

Antony Davies:

This apparent contradiction -- lower unemployment and fewer people working -- comes from a decline in labor force participation. You count as part of the labor force if you either have a job or are actively looking for one. If you leave your job and don't look for another, you aren't unemployed. You're no longer in the labor force at all. Today, fewer than 62% of adults are in the labor force. Excluding COVID, that's the lowest since 1976.

Antony Davies:

Changing demographics have been driving labor force participation down for more than two decades. As population growth slows, we have fewer younger workers to replace retiring older workers.

Antony Davies:

Compounding the problem, many younger workers delay entering the labor force to pursue further education. And for those who don't stay in school, elevated minimum wages can make it harder to land a first job.

Antony Davies:

Altogether, markets responded positively to last week's BLS report. Treasury yields dropped. The Dow rose. Expecting a lesser need for higher interest rates, the futures market cut the odds of a 2026 rate hike from 20% to 10%. That all makes sense.

Antony Davies:

If inflation is falling, if wages are recovering, and if households are not running up credit card debt, then maybe the Fed doesn't have to change course. On one hand, markets read the report as lowering the odds of a rate hike. But Fed chair Kevin Warsh prefers that markets not guess the Fed's next move. So on the other hand...

Antony Davies:

This is Antony Davies for the Economic and Market Watch podcast. Thank you for listening. Remember to download this week's Economic and Market Watch intelligence brief and dashboard.

Antony Davies:

Economic and Market Watch is available on podcast apps, including Spotify, Apple Podcasts, and other platforms. If you don't already, please follow, rate us, and leave a review. Our hands are full, but you can use yours to send us email, economicresearch@nrucfc.cop.