Robust spending, increasing income and the re-establishment of price stability amid strong productivity gains are the primary factors shaping the economic narrative. American households are well positioned to keep spending at a 3% to 3.5% pace as inflation moves back to 2% and real wages continue ... READ MORE >
personal consumption expenditures index
Fed’s key inflation gauge shows price stability as consumers hit the accelerator
Disinflation, strong household consumption and incomes rising above the rate of inflation continue to be the defining narrative of the U.S. economy as it heads into the second half of the year. With the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures index, ... READ MORE >
PCE inflation continues to ease in June as income and spending gain
The Federal Reserve’s preferred measure of inflation continued to ease in June, reaffirming that the central bank has achieved enough price stability to reduce its policy rate at its September meeting, which has been our baseline forecast for a number of months. Top-line inflation in the personal ... READ MORE >
GDP preview: U.S. top-line growth to show solid increase
We expect a 2.4% pace of growth with modest downside risk to our forecast when gross domestic product for the second quarter is released on Thursday. The two main swing factors are inventories, which should be quite strong and are likely to make overall top-line economic activity appear stronger than ... READ MORE >
Producer prices rise 0.2%, but signs still point to lower inflation in Fed’s key gauge
Despite the producer price index coming in stronger than expected on Friday, the Federal Reserve's most important measure of inflation, the personal consumption expenditures index, should remain near zero in June when it is released on July 26. Read more of RSM's insights on inflation, the economy and ... READ MORE >
As economy cools, Fed needs to cut rates
Growth, inflation and hiring in the United States are all cooling toward a more sustainable pace, which will most likely define the second half of the year as the Federal Reserve gets ready to reduce its restrictive policy rate. While the fiscal tailwinds that have bolstered the economy are ... READ MORE >
June jobs report preview: Beveridge curve implies a balanced labor market as hiring cools
The labor market and inflation have finally come into balance. As Mary Daly, president of the Federal Reserve Bank of San Francisco, said recently, the inflection point where unemployment risks could trump inflation risks “is getting nearer.” Now, the risk is that as the economy cools, hiring will slow ... READ MORE >
Fed’s key inflation gauge continues to cool in May as income increases by 0.5%
The Federal Reserve’s preferred measure of inflation continued to ease in May as the personal consumption expenditures Index remained unchanged on the month and rose by 2.6% from a year ago. The core PCE index, which excludes the more volatile food and energy components, advanced by 0.1% and increased ... READ MORE >
U.S. harmonized index of consumer prices: A more accurate metric of disinflation?
Part of a central bank’s challenge in setting its policy rate lies in knowing which measure of inflation to follow. From the consumer price index to the personal consumption expenditures index, different measures of inflation can tell a different story. On Friday, investors and policymakers will ... READ MORE >
PCE inflation preview: From noise to norm, rate cuts are on the horizon
Following the release of the consumer price index and producer price index this week, we are now forecasting a 0.084% increase in the May personal consumption expenditures index, translating to a 2.6% increase on a year-over-year basis. This will appear in the forecast table as a 0.10% estimate. But we ... READ MORE >