Inflation is falling, but corporate accounts aren’t getting lighter

The U.S. Producer Price Index in June fell 0.3% month over month. Just looking at this number, inflation pressure appears to be cooling, and the Federal Reserve has one less reason to rush into rate hikes.

But what companies are doing the math on isn’t just a single inflation bill.

In its latest Beige Book, the Federal Reserve said that economic activity in most parts of the U.S. is still growing, but higher fuel prices have begun to crowd out consumer spending on other goods.

United Airlines’ experience is more direct. In the second quarter, the company’s pre-tax profit was about $1 billion, and its full-year profit forecast is still within the original range at the high end; however, this year’s fuel spending could be nearly $6 billion higher than what was expected at the start of the year.

For TSMC, which reported its earnings this afternoon, it’s a different kind of spending.

In the second quarter, TSMC reported revenue of $40.2 billion, with a gross margin of 67.7%. For the third quarter, revenue is projected to rise further to $44.6 billion to $45.8 billion. The company also raised its full-year outlook for U.S.-dollar revenue growth to slightly above 40%, and increased its capital expenditure forecast to $60 billion to $64 billion.

United Airlines is adding spending because fuel has become more expensive; TSMC is adding spending because AI demand remains strong and it needs to accelerate capacity expansion.

One is more defensive, the other more aggressive, but the market ultimately asks the same question: can the extra money spent be turned into enough revenue and profit?

That’s why June’s inflation decline can’t be directly equated with a comprehensive easing of business pressure. Input prices, energy costs, the pace of capacity expansion, and how strong demand is will produce completely different outcomes across industries.

Current signals are not pessimistic. United Airlines is still maintaining a relatively strong profit outlook, and TSMC’s gross margin and third-quarter guidance are also higher than previously expected.

Still, going forward, you can’t just look at whether revenue is growing. The airline industry needs to see whether higher fuel costs can be passed through, while the semiconductor industry needs to see whether, after large-scale capacity expansion, capacity utilization rates and gross margins can be held.

Another five things from this morning to now

1｜All three major U.S. stock indexes close higher

The S&P 500 rose about 0.4%, the Dow rose 0.3%, and the Nasdaq rose 0.6%. Producer price inflation cooling provided support, but day-to-day moves are typically influenced by multiple factors and can’t be attributed to a single data point.

2｜The U.S. economy is still growing, and consumption is starting to feel squeezed

The Federal Reserve said that among 12 districts, 11 showed slight to moderate growth, while one was roughly flat. In some places, it has already been observed that higher fuel spending is crowding out other consumption.

3｜United Airlines holds its profit outlook, but fuel costs increase sharply

United Airlines’ second-quarter pre-tax profit was about $1 billion, and its full-year adjusted earnings per share forecast still leans toward the high end of the $9 to $11 range. However, the company estimates that fuel spending will increase by nearly $6 billion compared with what was expected at the start of the year.

4｜BlackRock assets under management rise to $15.34 trillion

BlackRock reported net inflows of about $192 billion in the second quarter, with adjusted earnings per share of $13.91, above market expectations. Funds continue to flow into ETFs and long-term investment products.

5｜TSMC profits hit a record high and it raised its full-year outlook

TSMC’s second-quarter net profit was about NT$706.6 billion, up about 77% year over year. U.S.-dollar revenue was $40.2 billion, with a gross margin of 67.7%. The company expects third-quarter U.S.-dollar revenue of $44.6 billion to $45.8 billion and raised its full-year capital expenditure to $60 billion to $64 billion. The earnings report shows AI demand is still strong, but going forward, developments also need to be tracked alongside expansion costs and changes in gross margin.

Data cutoff: 2026-07-16 17:15 (Singapore time)

Data sources: U.S. Bureau of Labor Statistics, the Federal Reserve, United Airlines, AP, Reuters, TSMC investor relations