On the heels of the Fed decision to leave the Fed Funds Rate unchanged, their favored gauge of inflation arrived this morning, the Core Personal Consumption Expenditure (PCE) reading. The Core PCE rose 0.1% during May, lower than expectations of 0.2% - which left the closely watched year-over-year Core inflation rate at 2.1%. This is outside the Fed’s desired range of 1 - 2%, but tolerable in light of the ongoing inflation fears…which has to come as a relief to the Fed.
Also embedded in the PCE report are readings on Personal Income and Spending, which both grew at rates larger than estimates in May. The boost in spending was likely due to the stimulus checks that were sent out to many American taxpayers in the beginning of May which demonstrates further that there is a spending problem in America. I was hoping we would’ve been flat on the spending report…saving is especially important in this economy.
Have a great weekend everybody!
