PCE to affirm inflation is slowing -- but watch out for revisions
PCE to affirm inflation is slowing — but watch out for revisions
Easing price pressures keep Fed on path to cut interest rates
By Jeffry Bartash
Published: July 25, 2024 at 2:14 p.m. ET
The most critical inflation gauge in the U.S. is likely to affirm that price increases are slowing, but the June report might also contain a bit of unwelcome news. ... Here’s what to watch for in the personal consumption expenditures price index, due out Friday morning.
Headline inflation
The PCE index is forecast to rise 0.1% in June after no change in May. Increases ranging from 0.1% to 0.2% a month are seen as consistent with low U.S. inflation.
The Federal Reserve views the PCE as the most accurate measure of price changes, rather than the better-known consumer price index.
So far, so good. But …
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LBN thread: https://www.democraticunderground.com/10143279412
I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.
"Regular" is the "headline" number that has "everything"
"Core" is the regular with food and energy removed (The Fed prefers this as a basis for projecting FUTURE inflation)
Finally, the main summary table
All are seasonally adjusted and ANNUALIZED
PCE-Personal Consumption Expenditures Price Index (Fed's favorite inflation measure)
CPI-Consumer Price Index (retail)
PPI-Producer Price Index (Wholesale prices)
Links to the data are with the graphs below
Average real (i.e. inflation-adjusted) hourly earnings are up over the past 2 years and are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013
CORE PCE through JUNE that came out 7/26/24
CORE PCE (seasonally adjusted): https://fred.stlouisfed.org/series/PCEPILFE
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"
This is the one that the Fed weighs most heavily. The Fed weigh the PCE more heavily than the CPI. And in both cases, they weigh the CORE measures higher than the regular headline measures for projecting FUTURE inflation
Regular PCE through JUNE that came out 7/26/24
Regular PCE (seasonally adjusted): https://fred.stlouisfed.org/series/PCEPI
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"
See https://www.democraticunderground.com/10143279412#post3
for the CPI and Producer Price Index graphs that came out 2 weeks ago