Victory. With Tragic Caveats
If Jerome Powell made a Christmas list, it's safe to say a benign read on PCE prices landed near the top. Santa, obliging soul that he is, delivered, clearing the way for traders to push the dovish envelope. Or sell the news in a thin holiday market, whichever the case may be.
Core price growth was just 0.1% in November (0.058% unrounded), according to the last inflation update markets will see in 2023. That was below the 0.2% official consensus, but by Friday, traders were expecting a downside
The pandemic inflation surge was especially bad for lower income, fixed incomes, renters, and small businesses vs pretty good for higher income, equity owners, homeowners, corporates, wealthy.
Pandemic fiscal stimulus partly offset the negatives for the former group, but Congress is now busy cutting holes in the safety net – children axed from Medicaid, scanty Section 8 funding, etc. In 2026 Congress may extend most of the TCJA tax cuts, lest the latter group feel a pinch.
DEflation!
(on the headline gauge. month-over-month. still. i’m using all lower-case and incomplete sentences to indicate voice and tone. all the kids are doing it.)