Core inflation in the US was the briskest since February last month, according to BEA data released into the pre-Labor Day, late-summer haze on Friday.
The unrounded MoM print on the Fed’s preferred measure of underlying price growth was 0.273%. So, 0.3% rounded, consistent with economists’ forecasts. June’s MoM calculation was revised warmer, making July’s increase look less pronounced.
The as-expected readout may be welcomed by markets. There’s evidence that goods prices are starting to see some tariff pass-through, mild or not, and a nascent resumption of upward pressure on services inflation raised eyebrows in the most recent CPI release.
Friday’s figures suggested little in the way of goods inflation in aggregate, while services price growth picked up.
On a YoY basis, core PCE price growth ran 2.9% in July, the BEA data showed. That too was the warmest in five months.
The personal consumption numbers were solid. Nominal spending rose 0.5% in July from the prior month and real spending 0.3%. Both were in-line with estimates, as was the personal income readout which showed a 0.4% advance. The saving rate was 4.4%.
If you’re inclined to worry, the most concerning aspect of Friday’s data was the acceleration in so-called “supercore” inflation.
That measure — core services price growth stripping away housing — showed a 0.4% advance, double the prior two months’ rate and the quickest since February’s 0.6% increase.
As was the case with the CPI release covering July, the irony is that price growth’s perking up not in goods, but in services. That’s bad — because services inflation tends to be “stickier” — but it’s also “odd,” as Scott Bessent put it earlier this month.
Setting that aside, Friday’s PCE tally for July was a remarkably consensus release. Consumer spending was the quickest in four months, and while the apparent uptick in services inflation’s certainly something to monitor, it damn sure isn’t going to ruin anyone’s Labor Day weekend stateside. Particularly considering that anyone who knows what “supercore PCE inflation” means is well-off financially and thereby unaffected by it.
You know what seems like a good idea right about now? How about we cut rates and uncork the money spigot. That surely won’t end up creating hyper inflation, right? Right???
Even if the delivery logistics are worked out, consumers will now see a new line item on any potential purchase, labelled “tariff,” that will serve as a constant reminder of Trump’s new tax on their purchases—if they can even afford to place orders in the first place.
And remember, this is just one sliver of the tariff pie, as U.S. consumers and businesses face steep cost hikes on everything else coming from overseas, including the raw materials that even “made in America” products require.
Voters were too stupid to understand what they were voting for as Trump nonsensically promised pain-free tariffs paid by other countries.
Now, their education begins.
‘De minimis’ loophole is ending; here’s what it means for online orders
https://www.washingtonpost.com/business/2025/08/28/de-minimis-expiration-shipping-prices-consumers/
My preferred source for certain men’s clothing items (UK based) has suspended shipments to the US.
Well don’t worry: I have a selection of 5 new Heisenberg Report shirts coming in three weeks. They’re all made in America and shipped from America.
Now that’s some good news. Looking forward to seeing what you put up on the site!
I will ping you directly to confirm the new payments you will make to me for not wearing your merch. Akin to a tariff or protection levy.
I feel better already!
Marketing genius.