By Paul Gomme and Peter Rupert
The BEA announced that the PCE price index rose 4.90% in April, down from the 8.27% March reading. The year over year number increased from 3.53% to 3.77% and our preferred trend measure rose 5.22% after a 5.38% increase in March. All well above the Fed’s 2.0% target.
The PCE price index excluding food and energy fell from 3.60% to 2.91%, the year over year number rose to 3.77% from 3.53% increase in March and the trend measure fell to 5.22% in April compared to 5.38% in March. Again, these inflation rates are well above the Fed’s stated 2% target.
In it’s second estimate of GDP for the first quarter, real GDP growth was revised down from 2.0% to 1.6%, mostly due to investment and consumer spending revisions.
The two reports don’t add much in the way of clarity as to future Fed Funds moves. The Fed-favored PCE is still solidly above the 2.0% target and the economy remains strong despite the downward revision to GDP. New Chair Kevin Warsh also adds to the uncertainty it becomes clearer what kind of Chair he will become.
