Economics
Fed’s Favorite Inflation Indicator Jumps Higher In July, Wage Growth Slowed
Fed’s Favorite Inflation Indicator Jumps Higher In July, Wage Growth Slowed
One of The Fed’s favorite inflation indicators – Core PCE Deflator…
Fed’s Favorite Inflation Indicator Jumps Higher In July, Wage Growth Slowed
One of The Fed’s favorite inflation indicators – Core PCE Deflator – rose 4.2% YoY in July (as expected but higher than June’s +4.1%). Headline PCE jumped up to +3.3% YoY (also as expected) – the biggest jump in YoY prints 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…
Source: Bloomberg
Services inflation accelerated in July but Goods saw the biggest MoM deflation since 2022…
Source: Bloomberg
Personal Income growth slowed for the 2nd month in a row as Spending accelerated for the 2nd month in a row…
Source: Bloomberg
On a year-over-year basis, spending accelerated as income growth decelerated…
Source: Bloomberg
Wage growth slowed:
-
Private workers wages and salaries 4.6%, down from 5.9%
-
Govt workers wages and salaries 6.0%, down from 6.1%
Adjusted for inflation, ‘real’ personal spending was higher in July (up 3.0% YoY)…
Source: Bloomberg
But real disposable income fell 0.2% MoM – its biggest decline since June 2022…
Putting all that together, we see that the savings rate plunged to 3.5% – the lowest since Oct 2022 – down from 4.3% – the biggest drop since Jan 2022….
It appears the American consumer is completely tapped out – consumer credit has flatlined (maxx’d out) and now savings are plunging again.
Tyler Durden
Thu, 08/31/2023 – 08:41
inflation
deflation
fed
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