Fed’s Favorite Inflation Indicator Slows Only Marginally, Americans’ Savings Rate Rises To 15-Mo Highs
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Fed’s Favorite Inflation Indicator Slows Only Marginally, Americans’ Savings Rate Rises To 15-Mo Highs
After US and German GDP gravely disappointed and inflation measures on both sides of the pond remain far more elevated that hoped for, this morning’s print of The Fed’s favorite inflation indicator will likely drive today’s early action among the algos.
Core PCE was expected to be flat at +4.6% YoY (and it was, but Feb was revised up to +4.7%) but the headline PCE printed hotter than expected at +4.2% YoY (although well down from the +5.1% prior)…
Source: Bloomberg
Even more focused, is the Fed’s view on Services inflation ex-Shelter, and the PCE-equivalent shows that is very much stuck at high levels…
Source: Bloomberg
However, while acyclical core inflation slipped, cyclical core inflation continued to march higher, which is a greater problem for the Fed. Cyclical core PCE inflation, which tracks inflationary pressures that are linked to the current economic cycle, is at the highest on record going back to 1985.
Source: Bloomberg
Americans’ Personal Income rose 0.3% MoM (slightly hotter than the 0.2% exp) and spending was unchanged (better than the 0.1% decline expected)…
Source: Bloomberg
On a YoY basis, Spending growth slowed to +6.0% (in line with income growth), but at its slowest since Feb 2021…
Source: Bloomberg
There is a possible silver lining in that Private
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