Inflation’s not tamed in America.

The Fed knows it. Minutes from the January FOMC meeting, released this week, underscored the point. Indeed, some officials last month wanted to include language in the updated policy statement alluding to the possibility of rate hikes in the event price growth doesn’t recede all the way to target.

It scarcely matters. Donald Trump would sooner eat a plate of vegetables — or apologize for posting an overtly racist video about the Obamas — than he would hike rates and yes, friends, it’s up to him now. Monetary policy, I mean. Or at least it will be come June.

With that in mind, an update on the Fed’s preferred inflation metric, released on Friday concurrent with a disappointing read on US GDP, showed underlying price growth was 0.4% in December (0.355% unrounded). That was ahead of estimates and the quickest in 10 months.

On a YoY basis, core PCE printed a 3% gain, also warmer than expected. We’re back to a full-point overshoot now on the core measure.

Headline PCE likewise overshot, printing a 0.4% advance for December. The YoY pace there was 2.9%.

The so-called “supercore” measure, which looks at services inflation excluding housing, showed a 0.3% gain in December from November. That’s too warm, but it could’ve been worse.

On the consumption front, personal spending beat, posting a 0.4% advance during 2025’s final month. But real spending was more or less flat. That speaks to the notion that the consumer was hesitant during the holidays, as tipped by a poor read on retail sales.

There’s some stagflation risk inherent in all this. Underlying price growth’s too brisk, the labor market’s a giant question mark and there’s a populist in the Oval Office determined to run the economy hot despite a growth impulse which, shutdown distortions aside, is generally healthy.

But that description admits of too many caveats to count. There’s a seasonal that tends to overstate the case vis-à-vis certain US macro aggregates early in the calendar year, for example. And there’s anyway next to no trust in the government data anymore.

At the same time, private sector measures of the hiring impulse in America suggest little to no payroll growth. AI disruption complicates that situation further. And on the prices front, we’re staring down the prospect of aggressive rate cuts when inflation’s still running a full point above target.

Good luck sorting all this out. Maybe Claude can help.