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Economist says cooling inflation positive news, returning to 2% elusive

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(The Center Square) – Inflation eased in May for a second straight month, but an economist sees signs the economy is showing signs of slowing down.

Core prices climbed 3.4%, below last month’s 3.6% rise, the lowest increase in three years. Contributing to the inflation numbers, average gas prices tumbled 3.6% nationally from April to May to $3.46 a gallon. According to AAA, the average price for a gallon of gas in Illinois is $3.76.

“The good news is that unless Congress decides to go on another stimulus spree, a return to 9% inflation is unlikely,” said Ryan Young, chief economist with the Competitive Enterprise Institute. “The economy’s good overall economic health means that Congress can hopefully restrain itself.”

The University of Illinois Flash Index, a measure of Illinois’ economy, fell slightly to 102.6 in May due to weak state revenue growth. Any figure over 100 signals growth.

“The U.S. and Illinois economies remain in what most observers believe is the long-desired soft landing characterized by slower growth and moderating inflation while avoiding a recession,” said Fred Giertz, professor emeritus at the Institute of Government and Public Affairs at the University of Illinois Urbana-Champaign.

Most other measures suggest the economy is healthy, including unemployment numbers, which remain relatively low. The national unemployment rate is 4%, while Illinois’ unemployment rate is at 4.8%

The Federal Reserve on Wednesday kept its key interest rate unchanged and hinted that just one rate cut is expected before the end of the year.

“Inflation has eased over the past year but remains elevated,” said a statement from The Federal Reserve. “In recent months, there has been modest further progress toward the Committee’s 2% inflation objective.”

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