Augusta Saraiva

Initial claims fell by 17,000 last week, in part because of a drop in Michigan, Missouri, and Texas, states that had registered large increases in unemployment applications in prior weeks.

Unemployment is close to triggering a recession indicator that has a perfect track record over the last half-century.

Deterioration in the labor market cements the Fed's path to interest rate cuts in September.

The Federal Reserve's preferred measure of underlying U.S. inflation rose at a tame pace in June and consumer spending remained healthy—two encouraging…

GDP increased at a 2.8% annualized rate, while personal spending advanced 2.3%. "This is a perfect report for the Fed."

The deceleration bolsters the case for the Fed to lower interest rates later this year.

The core CPI—which excludes food and energy costs—climbed 0.16 percent from April to May.

"Fed officials will view today's report as showing some cooling in consumer spending, which points to less inflationary pressure. Our view of the U.S. economy is not as optimistic."