The Fed’s favorite inflation indicator – Core PCE – fell once again in April to its lowest since April 2021 at +2.5% YoY…
Source: Bloomberg
Services inflation is slowing rapidly…
Source: Bloomberg
Headline PCE fell to +2.1%…
Source: Bloomberg
The downturn was triggered by a large deflationary impulse in non-durable goods…
SuperCore PCE also tumbled to four year lows with its first MoM decline since April 2020…
Source: Bloomberg
SuperCore PCE was driven down by a big drop in Financial Services & Insurance costs…
Source: Bloomberg
Finally, for all the terror of tariffs in the soft survey data, spending continues to increase and incomes are growing strongly…
Source: Bloomberg
On the income side, both govt and private workers saw compensation accelerate…
Source: Bloomberg
Given the outperformance of income over spending, the savings rate rebounded strongly to its highest since April 2024…
Source: Bloomberg
…it’s gonna be hard for Powell to justify the ‘pause’ now.
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