One Southern Indiana welcomes the following members that joined or rejoined during the month of July 2025.
No July Surprise: Inflation and Resilience Will Keep the Fed on Hold
Submitted by Uric Dufrene, Ph.D., Sanders Chair in Business, Indiana University Southeast
A few weeks ago, we noted there was an outside chance of a surprise rate cut in July. A softening labor market and early signs of consumer fatigue created a plausible case for such a move. Even Fed Governors like Christopher Waller publicly acknowledged the justification for a cut. If the Fed wanted to ease, the data offered a reasonable foundation.
But a rate cut isn’t coming in July—because it all comes down to inflation.
Yes, inflation has come down, but not far enough. The latest Consumer Price Index (CPI) showed the core inflation rate (which excludes food and energy) ticking up by 0.1 percentage points to 2.9%. While this was slightly better than expected, the monthly increase accelerated from 0.1% to 0.2%.
At first glance, headline inflation appears to be under control, which might suggest room for a Fed cut. But looking beneath the surface tells a different story.
Take a sampling of goods that rely on imports: prices are beginning to climb meaningfully. Appliance prices rose 1.9% in a single month—equivalent to more than 24% annually. Apparel prices overall were up at a 5% annual rate, but subcategories saw steeper increases. Men’s shirts and sweaters jumped 4.3% in just one month, and women’s dresses experienced a similar spike. Audio and video equipment rose 1.1% monthly, or more than 13% on an annual basis. “Other linens” surged 5.5% monthly, a pace exceeding 30% annually. These price pressures—especially in goods typically sourced through imports—are sending warning signals. So, while a case could be made for a Fed rate cut, July is off the table.
What is keeping headline inflation modest? Energy. A large reduction in energy prices is doing the heavy lifting. Energy commodities, including gasoline and fuel oil, dropped nearly 8% on an annual basis. Excluding energy, the headline inflation rate runs below 2.5%.
Meanwhile, the broader economy continues to show resilience. Despite headwinds, retail sales rebounded in May with a 0.6% increase—triple the expected gain of 0.2%. When excluding gasoline stations, sales climbed 0.7%. While there are weak spots, this data doesn’t point to a consumer collapse that would justify a rate cut.
On the labor front, we’re not witnessing a breakdown. Job openings remain roughly balanced with the number of unemployed, indicating a stabilizing labor market. While job growth has moderated compared to last year, it hasn’t contracted. Private payrolls were soft in the last report, but job gains were impressive after adding government payrolls. Manufacturing remains a weak spot, even with the aid of tariffs.
The more concerning labor market indicator is with unemployment claims. New claims remain historically low—well below levels associated with recessions. However, continuing claims are steadily rising and have not reversed since their low point in mid-2022. This suggests that while employers are slow to lay off workers, employment may be more difficult for those who lose their jobs.
In our last Eye on the Economy, we discussed emerging weaknesses beneath the surface of a record-breaking stock market. The warning signs are still present. But for now, the economy continues to chug along—just enough to escape a July rate cut from the Federal Reserve.
Economic Update | Markets Are Up, But Is the Economy?
Submitted by
Uric Dufrene, Ph.D., Sanders Chair in Business, Indiana University Southeast
Back in July 2000, the S&P 500 reached what was then an all-time high. Less than a year later, the economy slipped into a mild recession. While the downturn wasn’t severe, it took nearly seven years for the S&P 500 to recover. The NASDAQ took even longer—almost 15 years—to regain the ground lost during what became known as the “dotcom” recession.
Then, in late 2007, the S&P 500 again hit a peak—just before the Great Recession, the most significant economic contraction since the Great Depression. During the 2010s, markets steadily climbed with periodic corrections. In February 2020, the S&P was once again at record highs, before the COVID-19 shock led to one of the sharpest recessions in history. Thanks to extraordinary federal stimulus and Federal Reserve intervention, markets quickly rebounded and resumed their upward trajectory.
Fast forward to 2025, and the market is again at an all-time high—this time following a sharp pullback associated with “Liberation Day” and the announcement of sweeping tariffs. After several delays, the past week saw a wave of tariff reinstatements on several key trading partners at levels few anticipated.
While markets may be surging, that shouldn’t be mistaken for economic strength. History shows that market peaks have often preceded downturns. In 2001 and 2007, economic weakness followed record highs. Are we on the verge of repeating 2001 and 2007?
At this year’s Mid-Year Outlook, I projected that the economy would avoid a full recession but likely experience a slowdown. With the latest trade developments, the possibility of a more significant deceleration will grow.
The most recent employment report showed stronger-than-expected job growth—147,000 new jobs—but a closer look reveals that nearly half of those were in state and local government. Private sector growth was a modest 74,000 jobs, well below the expected 120,000. Manufacturing, one of the intended beneficiaries of tariffs, lost another 7,000 jobs.
Meanwhile, continuing unemployment claims are gradually rising, suggesting that displaced workers are taking longer to find new employment. In June, average weekly hours declined, along with average hourly earnings—indicators of a softening labor market.
On the consumer front, spending on both goods and services declined. Foot traffic, while not necessarily the same as sales data, offers more timely insight. Across Louisville Metro, restaurant visits are down 15% from last year. Bars, furniture stores, and department stores also saw declines, though home improvement shows a slight increase.
Are these local trends early signs of a broader national pullback in consumer spending? Time will tell. Tariff uncertainty, and market volatility are not the conditions businesses need to make long-term investments. The cracks in both consumer and labor markets could open wider.
ENCON Repeats as Fastest-Growing Rental Team in the United States
Jeffersonville, IN — June 23, 2025 — For the second year in a row, ENCON Equipment has been named the fastest-growing equipment rental company in the United States, topping Rental Management’s 2025 Market Movers list with an extraordinary 535% revenue-producing growth. This back-to-back honor cements ENCON’s reputation as a standout in the rental industry.
Breakout Year Continues with Debut on RER 100 List
Adding to its impressive momentum, ENCON has also earned a spot on the Rental Equipment Register’s (RER) prestigious 2025 Top 100 list—making its debut at No. 99 among the largest equipment rental firms in North America, with total annual sales of $12.7 million.
While the Market Movers list recognizes the fastest-growing companies based on percentage growth in rental revenue, the RER 100 highlights the largest rental companies in North America, ranked by total annual rental volume. ENCON’s inclusion on both lists underscores a rare combination of rapid growth and expanding market presence—proof that the company is scaling up while maintaining speed.
ENCON serves contractors across Kentucky, metro Louisville, and Southern Indiana through three regional hubs located in Nicholasville, KY; Somerset, KY; and Jeffersonville, IN. The company’s focus on compact and mid-sized machinery has made it a trusted rental partner across the region.
“Our team is driven by the belief that the right equipment can make a powerful impact,” said Jordan Mitchell, president of ENCON. “These awards say a lot about how hard our people work and how much our customers believe in us.”
Published annually, the Market Movers list tracks year-over-year growth, while the RER 100 captures the overall industry footprint. To make both lists in just two years—following a change in ownership—is a major milestone in ENCON’s journey to becoming a national leader in equipment rental.
To learn more, visit www.enconequipment.com.
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Media Contact:
Angie Gimmel
(502) 648-9283