Not that anyone cared — caught up as the American media was Friday in a domestic political circus complete with blond wigs and bright orange makeup — but core price growth on the Fed’s preferred inflation gauge ran 0.24917% last month.
The print technically counted as “in line.” With consensus, I mean. It was consistent with the collective wisdom of dozens of forecasters who’re rarely right individually and only occasionally so collectively. That’s the miracle of macro forecasting: Economists are so bereft that the wisdom of crowds doesn’t apply to them. This crowd isn’t very wise.
If we’re trading decimals (and why wouldn’t we?!), April’s MoM core PCE reading could’ve been softer. 0.22654% would’ve been more bullish. Or, better still, 0.21123%. Can you sense the sarcasm? It’s heavy. This exercise is entirely ridiculous. Witness market participants suggesting that a downward revision to January’s MoM print — from 0.50206% to 0.47629% — might be a tradable event.
As the chart shows, April’s print on the core gauge counted as the coolest since December.
The unrounded YoY print was 2.75366%. Consumers thus enjoyed the slowest pace of core price growth since March of 2021 in April. With Friday’s revisions, the YoY prints for March, February and January are 2.81284%, 2.81466%, 2.90905%, respectively, versus 2.82045%, 2.8401% and 2.93544%, previously.
Again, the idea that anyone would spend their time scrutinizing these decimals instead of — I don’t know, instead of doing pretty much anything else — is fabulously and self-evidently ridiculous. And yet here we are. You and me. Doing just that.
Personal spending undershot expectations in Friday’s release both in nominal and real terms. Real spending actually slipped 0.1% versus the consensus call for a small gain. That’s consistent with the idea that the American consumer’s finally tiring as savings buffers dry up and punishing rates on revolving credit discourage debt-financed discretionary spending.
The so-called “supercore” aggregate the Fed uses to monitor the underlying trend of price growth for services excluding energy and housing posted a 0.3% gain for April, cooler than March’s 0.4% pace.
I don’t know — and don’t care — what the unrounded print was.
Fed officials are tired of caring too, by the way. Last week, Chris Waller said he’s “look[ing] forward to the day” when the Committee doesn’t “have to go out two or three decimal places in the monthly inflation data.”
I could go on. But you get the idea. And I could write you a generic summary paragraph, but you can hopefully write it yourself. If you can’t, there’s always AI.
“Hello, ChatGPT?” “How can I help?!” “Write me a summary of a favorable PCE inflation report in the style of the mainstream financial media reporters you’ll be replacing later this year.”
But …. how will these numbers influence the dot plots?
How do us degenerates trade it H!?
Look to twitter to find out……..
Disposal income growth lowest since Nov 23.
Service expenditures growth continues falling. Goods expenditures growth are back to flat/negative after March’s sharp +ve blip.
While core PCE price growth has been stuck at a still-to-high level and without a clear +ve or -ve trend for 4-6 months, the economy is slowing. Which is either bad-is-good or bad-is-bad, depending on where you sit.
Assuming it’s all measured properly, which it isn’t. And all of that’ll be revised. Nobody knows anything.
The richer you are the less important any of this is, including rates. Just one question: after nearly a year with no change in rates, will it really make any difference whether there will be a 25bp cut in September? I mean seriously who cares? I sure don’t. Market rates are changing by the minute already, but not enough to make anyone but a pro operated algo care. The stock market is just another version of FanDuel. Look around, everywhere one turns there is someone begging us to bet on something, anything. Gamma is a calculus equation. Most people out there don’t even know how calculus works. It took me three tries to tame it (my heart wasn’t in the first two times). Everywhere there is something to bet on. The total financial derivatives market is more than 8 times the global annual GDP, nearing a Quadrillion dollars. Now that is some kind of gambling … on math for God’s sake. I am glad I am old.
Great post, Dr. Lucky!
“another version of FanDuel” is right.
The economy is slowing and inflation is cooling. Slowly. The trend is clear. Higher for longer will deliver what the Fed is aiming for.
More interest income for rich people?
I think that argument, like the pandemic funds spending spree thesis, is way overdone. Five percent for even people with a net worth under $1m — i.e., most people — doesn’t change their behavior much at all.
It’s north of $22 billion per month: https://heisenbergreport.com/wp-content/uploads/2023/10/MMFInterestIncomeOct2023.png