The drop in inflation in June paves the way for the US economy to avoid a recession, former PIMCO chief economist says

• The drop in inflation is strengthening the case the US will avoid a recession, economist Paul McCulley said.
• The former chief economist of PIMCO pointed to June CPI, which showed inflation eased to 3%. 
• Cooling prices in the economy is exactly what the Fed and markets want to see, he said.

The June inflation report is making the case that the US economy can avoid a recession after all, according to PIMCO’s former chief economist Paul McCulley.

McCulley pointed to the Consumer Price Index report on Wednesday, which showed prices slowing to just a 3% year-over-year increase last month. That’s the lowest inflation reading in over two years, and it’s well-below where prices were in July 2022, when headline inflation clocked in at 8.5%.