Underlying consumer price growth on the Fed’s preferred measure rose 3.4% last month from the same period a year ago, the BEA said, in this week’s only top-tier US macro release.

Silly as this’ll sound in the presence of the quickest core inflation since October of 2023 (when 10-year US yields briefly sported a five-handle), Thursday’s personal income and spending report will probably be greeted as good news by markets.

For one thing, the MoM print on the core PCE price gauge was 0.32%. That’s double the pace needed if we’re actually hoping to badger the annual rate back down to 2%, but we’re not. No one believes that anymore.

And in addition to being in-line with consensus on a rounded basis, the unrounded print came as a bit of a relief in the context of scattered calls for a readout closer to 0.4%.

Although I should mention the prior month’s pace was revised higher such that it now rounds up to 0.3%, I wouldn’t make much of that. It wasn’t a large revision. The unrounded print for April’s 0.251%.

The figure’s a not-so-subtle reminder: MoM prints consistent with 2% annual core price growth are exceedingly rare these days.

On the headline gauge, a 0.4% MoM advance was actually cooler than expected. The YoY pace was 4.1%, more than two full percentage points faster than the Fed’s target, but who’s counting? Not Kevin Warsh, and even if he is, “there’s a task force for that.”

Putting away the snark (for now), the most important prints from this release were arguably the personal income readout and the real spending tally. The former rebounded from unchanged in April to a 0.7% gain in May. That matched the highest estimate from the nearly five-dozen economists who ventured a guess.

As for real spending, a 0.26% gain topped estimates and nearly matched March’s 0.27% advance for the best monthly readout since August.

Other than the ~two-thirds of American households for whom 4% headline inflation’s an economic death knell (there’s the snark coming back), no one’s going to complain about any of the above. All of these readouts could’ve been materially worse under the circumstances. If anything, this report was more evidence to suggest the US economy’s perilously close to overheating. Again.

“As the US consumer continues to demonstrate remarkable resilience, it is difficult to ignore the supportive influence of the wealth effect,” BMO’s Ian Lyngen remarked. “As such, the performance of US equities will remain a pillar for any medium-term optimism for US households to continue supporting growth in the real economy and avoiding a period of contraction once the AI buildout wanes.”

Notably, the saving rate moved back up to 3% after plunging to 2.6%, among the lowest levels ever recorded outside of the lead-up to the financial crisis. That print — the offending April readout — was revised higher to 3%, which is to say that according to Thursday’s release, the saving rate was stable from April to May, albeit at a very low level.

Finally, so-called “supercore” inflation — i.e., core services price growth excluding housing — showed a 0.5% MoM gain. That’s pretty warm, as was the YoY pace on that metric, 3.9%.