One of The Fed’s favorite inflation indicators – Core PCE Deflator – slowed to 3.9% YoY in August (its lowest since Sept 2021). Headline PCE jumped up to +3.5% YoY, its highest since May…
Source: Bloomberg
After 3 months of ‘deflation’, Goods prices rebounded strongly in August (up most since June 2022)..
Source: Bloomberg
Even more focused, is the Fed’s view on Services inflation ex-Shelter, and the PCE-equivalent shows that is very much stuck at high levels (ignore the data series, Bloomberg screwed up on revisions)…
Source: Bloomberg
Personal income grew 0.4% MoM and so did Spending…
Source: Bloomberg
But both remain up significantly on a YoY basis…
Source: Bloomberg
Adjusted for inflation, ‘real’ personal spending was higher in August (up 2.3% YoY)…
But Real Disposable Income fell 0.2% MoM (the 3rd monthly decline in Americans’ earnings in a row)…
And Wage growth is slowing:
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August Private worker wage growth down to 4.6%, from 4.9% in July and the lowest since March 21
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August Govt worker wage growth down to 6.8% from 6.9% in July, and the lowest since May
All of which pushed the savings rate lower (amid numerous revisions once again) to 3.9% of DPI – the lowest in a year…
So ‘stickier’ than expected inflation – driven by a re-emergence of goods inflation – and savings rates shrinking again… Bidenomics, bitches!
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https://www.zerohedge.com/markets/savings-rate-tumbles-one-year-lows-feds-favorite-inflation-signal-remains-sticky-high
