Core PCE increased by 0.1% from the prior month and was up 2.6% from the previous year
Core PCE index shows prices rose at their slowest pace in six months
Household spending rebounded in May after a pullback in April
Personal income reached $23.9 trillion, second only to March 2021 when Americans received stimulus payments
Traders are pricing in a 59.5% chance that the Fed will lower interest rates at its September meeting
The Federal Reserve's preferred measure of underlying US inflation, the core Personal Consumption Expenditures (PCE) index, showed a deceleration in May as prices rose at their slowest pace in six months. The Commerce Department reported that core PCE increased by just 0.1% from the prior month and was up 2.6% from the previous year.
The latest inflation data comes as Federal Reserve officials have remained cautious about inflation's trend, noting that it will not be appropriate to cut interest rates until they have 'greater confidence' in its path towards their 2% objective.
Household spending rebounded in May after a pullback in April, and personal income reached $23.9 trillion, second only to March 2021 when Americans received stimulus payments from the American Rescue Plan Act of 2021.
Traders are pricing in a 59.5% chance that the Fed will lower interest rates at its September meeting, according to the CME Group FedWatch Tool.
The slowing inflation trend and solid income growth offer some hope that price pressures can be tamed without lasting damage to consumers. However, economists and analysts continue to monitor inflation closely as it remains above the Federal Reserve's preferred target.
The S&P 500 rose by 0.7% on Friday, with the Nasdaq Composite advancing 0.9% and the Dow Jones Industrial Average adding 228 points or 0.6%.
Inflation in May slowed to its lowest annual rate in more than three years, with core PCE rising just 0.1% last month and increasing by 2.6% from the prior year.
The consumer sentiment index for June came in higher than expected, rising to 68.2 from the preliminary reading of 65.6.
Traders are pricing in a 59.5% chance the Fed will lower interest rates at its September meeting according to the CME Group FedWatch Tool.
High inflation has created severe financial pressures for most U.S households, disproportionately affecting low-income Americans.
Accuracy
Inflation measure closely watched by the Federal Reserve held steady in May with an unchanged monthly figure.
Prices climbed 2.6% on an annual basis, the slowest annual rate since March 2021.
Core prices, which strip out food and energy measurements, climbed 0.1% from the previous month and were up 2.6% from a year ago.
Consumer spending increased just 0.2% in May below expectations.
Deception
(50%)
The article contains selective reporting as it only reports the figures that support the author's position of inflation remaining high. The author does not provide any context or explanation for why these figures are significant or how they relate to the overall economic situation. Additionally, there is a statement from Seema Shah that implies a prediction about future policy actions by the Fed, which is editorializing and goes beyond reporting facts.
High inflation has created severe financial pressures for most U.S. households, which are forced to pay more for everyday necessities like food and rent.
The personal consumption expenditures (PCE) index showed that prices were unchanged from the previous month.
Both of those figures are in line with expectations.
Many economists anticipate that spending will slow further in the coming months as consumers continue to grapple with expensive goods, high interest rates and the resumption of federal student loan payments.
Fallacies
(85%)
The author makes an appeal to authority when quoting Seema Shah's opinion on the PCE index and its implications for the Fed. The author also uses inflammatory rhetoric by stating that 'high inflation has created severe financial pressures for most U.S. households' and 'the burden is disproportionately borne by low-income Americans'.
"The lack of surprise in todays PCE number is a relief and will be welcomed by the Fed."
"High inflation has created severe financial pressures for most U.S. households."
Personal income in the US reached $23.9 trillion in May, second only to March 2021 when Americans received stimulus payments from the American Rescue Plan Act of 2021.
The Federal Open Market Committee’s next scheduled meetings are in July, September, November, and December.
Accuracy
The May reading of the personal-consumption expenditures (PCE) price index shows a 0% change from April and a 2.6% year-over-year increase in the headline PCE price index.
In May, prices remained virtually unchanged, rising 0% from April and by 2.6% year over year in the core price index.
The Federal Reserve’s preferred inflation measure, the personal-consumption expenditures price index, remained unchanged in May and increased 2.6% from a year earlier.
Core PCE was up 0.1% over the prior month and increasing by 2.6% from the prior year.
Headline PCE was flat on the month and up 2.6% on an annual basis, while core PCE excluding food and energy prices rose just 0.1% last month and increased by 2.6% from the prior year.
