One great economic question mark of 2024 has been whether the post-pandemic inflationary episode is well and truly dead or would prove to have more lives than a horror movie monster.

The big picture: Midway through the year, it looks like the monster has indeed been vanquished. This morning's new readings of the Fed's preferred inflation measure, the Personal Consumption Expenditures Price Index, confirm as much.

• A spurt of inflation in the first quarter of the year looks to have been more noise than a signal about underlying price trends.
• Accompanying data on incomes and spending out this morning points to growth that is solid but not excessive.

Why it matters: That means a Fed rate cut in September looks highly likely, barring a major reversal in inflation data between now and then. Futures markets now imply a certainty of at least a quarter-point rate cut then, and even assign roughly 12% odds to a half-point cut.

• Indeed, assuming the Fed elects not to adjust rates in its policy meeting next week, there's a decent case that it will be behind the curve, given signs of softening growth and continued disinflation.
• At next week's meeting, "we suspect policymakers will have a long and lively debate about whether and how to signal a September rate cut," wrote EY-Parthenon chief economist Gregory Daco in a note. "In fact, some policymakers may even argue, as we have, that a July rate cut would have been optimal and preferable," given conditions.

By the numbers: PCE inflation was 0.1% in June, with core — excluding food and energy — at 0.2%. Over the last year, overall prices are up 2.5% and core prices are up 2.6%.

• The trend is the Fed's friend, with core inflation over the last three months an annualized 2.3%, not far from the Fed's 2% target. That number had spiked to 4.5% in the January through March period and was still at 2.9% for the March through May period.
• Disposable personal income was up 0.2% in June, or 0.1% in inflation-adjusted terms, which is hardly the kind of number you would expect to see in an economy that is still overheated.

Between the lines: Officials were scarred by a disinflationary head-fake in the summer of 2021, which caused Fed leaders to judge that inflation was transitory and there was no need to move quickly to tighten policy.

• That mistake three years ago has made them wary of prematurely cutting rates.

The bottom line: With half a year's data in hand, it is now clear Q1 2024 was an inflation blip, not a re-inflation trend.

The nation's political and economic backdrop has shifted in big ways in recent months. Consumer sentiment hasn't.

• The University of Michigan's final reading of consumer sentiment for July was "virtually unchanged," according to a release, as has been the case for the past two months.

The index was 66.4 this month, down about 2 points from June — a decline that is within the margin of error, though the drop brings the index to the lowest in eight months.

• The index of consumer expectations fell to 68.8, down a point from June and matching the lowest reading of the year.

Between the lines: Consumer sentiment is above the all-time low hit in June 2022 but "remains guarded as high prices continue to drag down attitudes, particularly for those with lower incomes," Joanne Hsu, the survey's director, said in a press release.

• Hsu added that "continued election uncertainty is likely to generate volatility in economic attitudes in the months ahead."

The big picture: Even as unemployment trends higher, consumer expectations for employment haven't faltered.

• "Labor market expectations remain relatively stable, providing continued support to consumer spending," Hsu said in the release.