The Feds will monitor inflation and inflation expectations as it's seen as a threat that could drag the world's largest economy back into darkness, but still growth was sustained during the first quarter and the second quarter doesn't seem to be bad either and that's what drove the Feds to say that downside risks to growth have somehow diminished over the last period!

The economy grew on an annual 1.0 percent in the first quarter as consumer spending and exports continued to support growth, even as the housing sector continue to subtract from growth and rising food and fuel costs continue to threaten Americans' spending which counts for nearly 2/3 of the U.S. economic growth.

Today we also have an important set of data, as first we have the infamous income report for May, the IRS started handing out the tax rebates during the month and those should have helped boost consumer spending which is expected to rise 0.7% after a rather modest rise of 0.2% back in April. As for personal income expectations are also pointing for a 0.4% in May after a reported rise of 0.2% previously.

Moreover the Feds' favorite gauge for inflation, core personal consumption expenditures is due today as well, core PCE is expected to show a rise of 0.2% on the month after rising 0.1% back in April, while compared with a year earlier core PCE is expected 2.1% inline with the previous rise.

Inflation is surly becoming a major concern for the Feds and indeed all central bankers around the planet, as energy and other commodities prices continue to heavily soar, especially oil prices as they continue to roam above the $130 mark per barrel, adding further pressures on officials especially as they attempt to pull their economies up from prospects of a global slowdown!!!

Also today the University of Michigan will release its confidence index, expectations are pointing for a slight improvement in June to 56.8 from 56.7, consumer confidence continues to hit multi-decade lows on higher living costs, weakening labor market, and rising inflation expectations.

The easing times have passed us by and now the new year is holding an inflationary theme, the U.S. economies keep on bumping into one obstacle after the other, but the Feds have been able so far into driving the economy safely yet safety shores remain somehow far dear reader and until they drive us to shores safely many hindrances will appear but we should be able to sleep well at night and for that we should give the Feds some credit!!!