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Tuesday, May 30, 2017

US April core PCE 1.5% y/y vs 1.5% y/y expected

  • Prior was 1.6% y/y
  • Core +0.2% m/m vs +0.1% expected
  • Prior core -0.1% m/m
Headline inflation:
  • PCE deflator 1.7% vs 1.7% y/y expected
  • Prior PCE deflator +1.8% y/y (revised to +1.9%)
  • PCE deflator +0.2% vs +0.2% m/m expected
  • Prior deflator -0.2% m/m
Income and spending (all m/m):
  • Personal income +0.4% vs +0.4% expected
  • Prior personal income +0.2% (no revision)
  • Personal spending +0.4% vs +0.4% expected
  • Prior personal spending 0.0% (revised to +0.3%)
  • Real personal spending +0.2% vs +0.2% expected
  • Prior real personal spending +0.3% (revised to +0.5%)
The beat on the core month-over-month number is great news for the Fed hawks and helps to clear the way for a June 14 hike. In addition, the strength from consumers on the spending side bodes well. We already know about some of that because of the upward revisions to Q1 GDP last week but it's good confirmation.
Digging deeper into the numbers, core PCE y/y was +1.538% unrounded so that's a good sign.
What's a bit troubling is that all the inflation is coming from services, durable goods are highly deflationary.
  • Goods +0.3% y/y
  • Durable goods -2.7% y/y
  • Non-durable goods +1.9% y/y
  • Services +2.4%

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