The PCE indices are all very well-behaved on a year-on-year basis. But except for the dominant shelter component, virtually everything else accelerated in February, giving a much harsher near-term outlook on inflation than CPI did two weeks ago. This is a reversal from January, where CPI was the bad cop and PCE was the good cop. Yet another factor clouding the Fed's outlook.
US PCE Inflation
US PCE Inflation
Friday, February 28, 2025
PCE inflation is weighted differently than CPI, and the January numbers today look a lot better. At 2.51% and 2.65%, headline and core CPI fall sequentially, nearing the 2.0% target. Sudden deceleration in services inflation helps Powell's "supercore" measure. At 3.08%, it's the lowest it has been in this whole disinflationary cycle.
US PCE Inflation
Friday, January 31, 2025
Core PCE runs at 1.89% at an annual rate in December, below the Fed's target. Powell's "supercore" drops year-on-year for the second month in a row. The goods sector is now back to zero year-on-year, after almost two years of deflation. All good.
US PCE Inflation
Friday, December 20, 2024
Markets don't seem to be in the mood for good news. But we just got some. PCE, the inflation measure the Fed actually targets, came in below consensus and shows deceleration across the board, with 1-month measures weaker than 3-month measures weaker than 12-month measures. Maybe the Fed didn't need to panic. And by the way, this shows how approximate our statistical data is -- when CPI and PCE, driven by the same underlying data, tell such different stories just because of their differing weighting schemes.
US PCE Inflation
Wednesday, November 27, 2024
PCE inflation is right at expectations. Like CPI two weeks ago, it wasn't the greatest month for disinflation. But November is shaping up to be better.
US PCE Inflation
Thursday, October 31, 2024
At 2.09% year-on-year, we'll take the win. PCE inflation is back to the Fed's 2% target. Internally, the goods sector continues to deepen its outright deflation.
US PCE Inflation
Friday, September 27, 2024
PCE beats, with headline printing at 2.24% year-over-year, essentially at the Fed's target. On a monthly basis, both headline and core are below target. Downward revisions are part of the story. But outright deflation in the goods sector is even more important -- down almost 1% year-over-year, the steepest deflation since the worst days of the pandemic lockdowns.
US PCE Inflation
Friday, August 30, 2024
Slight beat on core PCE. The best news is that Powell's "supercore" continues to fall. Under the hood, the leading goods sectors that have been in deflation for a year are stabilizing and moving a little higher, while the "sticky" (lagging, actually) services and shelter sectors continue to fall.
US PCE Inflation
Friday, July 26, 2024
Powell's "super-core" inflation came nearly at the Fed's target for June at 2.26% at an annual rate. The only acceleration is in core goods -- which Powell hasn't been looking at (and that has "accelerated" to a mere 1.20% at an annual rate. How can the Fed not signal the first cut in September at next week's FOMC?
US PCE Inflation
Friday, June 28, 2024
The Fed's preferred measure of consumer inflation confirms the measure the rest of us use -- disinflation continues, reversing the false-alarm of the first quarter. Powell's pet "supercore" falls to a 5-month low, challenging the year-end low. Goods inflation prints even lower than its CPI counterpart, in outright deflation.