The July PCE report was out this morning. Both PCE and core PCE were 0.2% MoM. But the numbers ticked higher on an annual basis. PCE was 3.3% in July vs. 3.0% in June. Core PCE was 4.2% YoY in July vs. 4.1% in June. Core PCE inflation is the 2% target the Fed is trying to optimize for. Obviously it’s not 2% yet. But other numbers indicate that the inflation will continue to trend down. Disposable personal income actually declined 0.2% after adjusting for inflation. Growth for consumer spending is also slowing. People also do have to start making student loan payments starting September 1st. It’s quite likely that we will be able to achieve the 2% core PCE target but the economy will also slow due to weaker income growth and weaker consumer spending.
Comments
No posts