Monday's Scoop: Untethered🌤️

Hey friend - hope you had a lovely weekend.

Catch up with the Weekly Scoop. Did you catch our most recent Explained diving into how you can promote sustainability with your spending?

Here’s what you need to know today to inform your work, spending, and investments…

1. Spending increased in May as income rose, but Americans still struggle to save.

2. The cost of living stopped rising last month, and some things are getting cheaper.

3. Government agencies lost a lot of their power to regulate big business.

Unemployment Rate: 4.0%
^{Still near the lowest rate in 50+ years}

Government agencies won’t have as much power to regulate big businesses moving forward. On Friday, the Supreme Court overturned the Chevron deference, a 40-year-old doctrine that protected the government's ability to enforce consumer and environmental protections. Congress makes the laws, the executive branch implements them, and the judicial branch settles any debates about the proper application of the laws. There is always a grey area since Congress rarely writes a perfectly detailed law accounting for every future conditional situation. For the past four decades, judges deferred to government agencies, like the Environmental Protection Agency or National Labor Relations Board, as experts in their field to enforce the details of the broad instructions from Congress. The Supreme Court’s new ruling requires courts to independently decide the proper application of any ambiguous laws from Congress. This change makes it harder for agencies like the EPA to enforce regulations on pollution and for the SEC to implement certain disclosure rules. The decision shifts more responsibility to Congress to create detailed laws and more power to individual federal judges to decide how policy should be implemented across various issues, from healthcare to pollution, labor rights, artificial intelligence, and finance.

Inflation Rate: +3.3% (YoY), 0% (MoM)
^{Policymakers aim for 2% YoY inflation (May CPI)}

The cost of living stopped rising last month, and some things are getting cheaper. Policymakers’ preferred inflation gauge, the personal consumption expenditures (PCE) price index, showed no change last month, thanks to a significant drop in goods prices, especially for recreational items and gasoline. Excluding volatile food and gas prices, the so-called core PCE rose only 0.1% in May. Overall, the cost of living is only 2.6% higher than a year ago. Policymakers have been restricting spending and investment with higher borrowing costs, trying to get inflation closer to a more normal 2% annual price increase.

Spending increased in May as income rose, but Americans still struggle to save. The Commerce Department reported that even adjusted for inflation, consumers spent 0.4% more in May than in April. That’s thanks to wages starting to regain ground on the cost of living. Disposable personal income rose 0.5% in the month. However, not much is going into savings. The personal saving rate, what’s left of our disposable income after taxes and expenses, rose slightly to 3.9% but remains far from the 7.7% rate before the pandemic.

The Market: ⬆️ +0.3%
S&P 500: 5,475.09
1Mo: +4% | 1Yr: +23% | 5Yr: +83%

The market drifted higher to start the month as investors welcomed the recent Supreme Court rulings and growing support for a second Trump term. Political and judicial trends point toward less regulation and lower taxes for big businesses.