The Fed’s favorite inflation indicator – Core PCE – rose less than expected on a MoM basis (+0.1% vs +0.2% exp), but on a YoY basis, Core PCE rose from 2.6% to 2.7% (in line with exp) – the highest since April...
Source: Bloomberg
The headline PCE did fall to +2.2% YoY – the lowest since March 2021…
Source: Bloomberg
So-called SuperCore PCE re-accelerated in August to +3.29% YoY…
Source: Bloomberg
Both income and spending rose less than expected in August (income smallest MoM rise since Jul 2023 and spending equal lowest since Jan 2024)…
Source: Bloomberg
On a YoY basis, both spending and income growth slowed…
Source: Bloomberg
Thanks to massive revisions (don’t even get us started), the savings rate comps are a mess. But we note that at 4.8% of disposable income, it is at its lowest since Dec 2023. For comparison, the savings rate (pre-revision) in July was 2.9%… WTF!
Source: Bloomberg
Personal income was revised dramatically higher…
Spending was also revised higher (but less so)…
A 2 percentage point revision higher for the savings rate… every effort being made to make the consumer appear richer than they are…
And finally, imagine how bad things would be if the government wasn’t having over billions to ‘we, the people’ all of a sudden…
Source: Bloomberg
In other words, the consumer is now wiped out and yet key inflation measures refuse to drop materially. So yes, the Fed will continue to cut (election year after all) and then we can finally unleash the second coming of the Arthur Burns hyperinflation Fed.
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