PCE deflator is describe as the Fed favorite inflation signal. So, for the Fed to see the core PCE decrease to 0.2%, excluding food and energy, will be considered a victory (hint: it’s not) as it’s the lowest increase of PCE for the current year. However, from the same month one year ago, PCE price index was 2.7%.
There was an increase in Core PCE, mainly from services. Biggest increases in services were housing (shelter, due to 0% down payment and loans given out to illegal immigrants for housing), utilities, financial services, insurance and healthcare for $49.1 billion. It was offset by transportation and services, recreational goods and vehicles (which explain why cars inventories are piling up despite positive development) by $10 billion.
Personal savings was $744.5 billion with personal rate saving percentage at 3.6%. As I wrote on my previous post, personal savings is very low compared to $5 trillion back in 2021.
While you might be wondering, with such a low personal rate savings, how are people getting by?
With credit card debt. Since 2021, credit balances have climbed to nearly 50 percent. With credit cards annual percentage rate at 20.66%, consumers are feeling the pinch. As I wrote before, delinquency will keep rising as inflation shows no sign of slowing down.
Still, consumers keep spending on recreational products and services, the question is when, not if, will consumer be tapped out with current economic conditions? Looking ahead, remains to be seen.
The RedBlueprint 