11/30/2023: Core PCE was up 0.2% in October
The October PCE report was out this morning. PCE price index was flat and core PCE went up 0.2% MoM in October. Core PCE inflation is the 2% target the Fed is trying to optimize for. Core PCE continues to trend down on an annualized basis and is now at 3.5% YoY. It probably will take a few more months for the core PCE to go below 3% but it’s unclear if we will get to 2% in 2024. Overall, October’s inflation number is quite muted and personal consumption expenditures only increased moderately. October job growth also slowed and home sales dropped to a new 13-year low. I suppose there will be no more rate hikes in this cycle. But I can feel something is brewing. Raising money for startups is a lot harder these days. Contractors started to respond to my calls again. Office and apartment rents are falling. Busy restaurants get less busy. Of course I live in the Silicon Valley bubble which is not representative of the US economy. But if I can feel that things are slowing down in SV while AAPL 0.00%↑ stock still trades near an all time high, I can’t imagine other areas are doing much better.