Treasury Secretary Scott Bessent on Wednesday told the Senate Finance Committee that he expects inflation to be a “short-term blip.” Bessent also said that “the economic data is very strong.” Interestingly, the Fed’s Beige Book survey said that “Overall, there were reports of increased credit card usage, fewer retail visits, and stronger demand for necessities.”The Fed’s comment about fewer retail visits is likely due to consumers making fewer trips due to high gasoline prices, but when they do get out and about, they are apparently spending up a storm, since Costco announced that its same-store sales rose 8% in May, while its online sales surged 20%.Speaking of a strong economy, the Institute of Supply Management (ISM) on Wednesday announced that its non-manufacturing, service index rose to 54.5 in May, up from 53.6 in April. The business activity component rose to 57.7 in May (up from 55.9 in April), and the new order component rose to 57.3 in May (up from 53.5 in April). Even more amazing was that the inventories component surged to 62.5 in May, up from 53.1 in April, signaling that there are a lot of orders in the pipeline due to a growing backlog. Fully, 17 of the 18 service industries that ISM surveyed reported an expansion in May, up from 14 industries in April.Expectations remain high for Friday’s payroll report in the wake of the ADP report. ADP announced that private payrolls rose by 122,000 in May, which was the largest increase in the past 16 months and significantly better than economists’ consensus estimate of 110,000. Nela Richardson, chief economist at ADP, said, “Hiring was more broad-based in May than we’ve seen in the last few years.” Richardson added that “The labor market continues to show sustained momentum going into the summer hiring season.” Meanwhile, it appears that the European Union (EU) may be teetering on slipping into a recession, since retail sales declined 0.4% in April. Higher energy prices are apparently curtailing consumer spending in the EU. The European Commission analysis concluded that around 560,000 EU jobs could be cut this year due to the energy costs, while around 600,000 jobs are under pressure in the automotive industry. It is very hard for the EU to grow when they are about to lose over one million jobs, so a recession may be imminent.