US Macro Updates

The One Stop Portal for US Macroeconomic Data. Simplified and Summarized! 

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

30th Nov 2023

Personal Income and Outlays / PCE Price Index

Key takeaway: The clamour has been increasing for a soft landing on the back of inflation steadily trending down. This view got some further support from the latest PCE data. Headline PCE Price Index for October printed at 3.0% y-o-y (much lower than 3.4% in September) and 0.0% m-o-m. Both numbers were mostly in line with expectations. Similarly, core PCE Price Index – the Fed’s preferred gauge of inflation, also came in mostly in line with expectations at 3.5% y-o-y and 0.2% m-o-m. The figures, similar to headline numbers, were much lower than September. The more important point is that most recent months have seen a relatively muted Core PCE Price Index print and the 6 month annualized core PCE is now approximately 2.6%. This is the same as the Fed’s median expectation for Core PCE in 2024. No wonder markets have started pricing in a rate cut by mid 2024 and folks like Bill Ackman forecasting a rate cut by March! Yet, this is the time to not through caution to the wind. The move back down to 2% is likely to be much more bumpy if not difficult. Personal income growth was also muted at 0.2% m-o-m. Personal consumption expenditure, on a nominal basis, was also relatively low at 0.2% m-o-m. Durable goods consumption decreased sharply by 0.5%. Services consumption continued to register solid increases : 0.4% m-o-m in October.

27th Oct 2023

Key takeaway: Headline PCE Price Index for September printed at 3.4% y-o-y (same as 3.4% in August) and 0.4% m-o-m, mostly in line with expectations. Similarly, core PCE Price Index – the Fed’s preferred gauge of inflation, also came in mostly in line with expectations at 3.7% y-o-y and 0.3% m-o-m. The more important point is that the year over year increase is now in the 3 handle range and at a level that the Fed would be more comfortable with. Yet, the move back down to 2% is likely to be much more difficult. Personal income growth was 0.3% m-o-m. Personal consumption expenditure, on a nominal basis, continues to be relatively high – at 0.7% m-o-m. Durable goods consumption increased sharply by 1.0%. Services consumption continued to register solid increases : 0.8% m-o-m in September.

29th Sep 2023

Key takeaway: Headline PCE Price Index for August printed at 3.5% y-o-y (up from 3.4% in July) and 0.4% m-o-m, mostly in line with expectations. The slight increase in y-o-y was expected given base effects and the recent rise in gas prices. However, more importantly, core PCE Price Index – the Fed’s preferred gauge of inflation, moderated for the first time in recent history into the 3 handle : 3.9% in August from 4.3% in July. The monthly print was also fairly low at 0.1%. This is welcome news from the Fed’s perspective. Personal income growth, on the other hand, accelerated to 0.4% m-o-m, keeping the pressure on any  signs of a wage price spiral. Personal consumption expenditure, on a nominal basis, continues to be relatively high – at 0.4% m-o-m. Durable goods consumption decreased 0.6% m-o-m. But services consumption continued to register solid increases : 0.4% m-o-m in August.

31st Aug 2023

Key takeaway: For the past 2 months of May and June, not only had PCE Price Index fallen on a y-o-y basis, it had also surprised to the downside compared to consensus expectations. In contrast, the PCE price Index rose from 3.0% in June to 3.3% in July. Once again though, this was in line with the consensus expectation given the recent rise in food and energy inflation. Similarly, core PCE Price Index also came in line with expectations at 4.2%. The more important point to note is that this level of around 4% still remains way too high from the Fed’s perspective and the risk of more interest rate increases continues to spook risk markets. Personal Income rose 0.2% in July. This increase continues to be driven by increases in wages – which have grown at a healthy rate over the past 6 months. Overall real wage growth numbers have been strong in Q1 and have moderated a bit in Q2. The Employment Cost Index for Q2 was also lower than expectations at 1.0% (vs 1.1%). As long as inflation remains low, the Fed can breathe easy. Any turn in inflation numbers will bring wage growth into sharp focus again. Lastly, Personal consumption expenditure increased a significant 0.8% m-o-m. This print was much higher than the consensus estimate and once again highlights a resilient consumer.

28th Jul 2023

Key takeaway: For a second month in a row, headline inflation has surprised to the downside. Headline PCE Index increased 0.2% m-o-m and 3.0% y-o-y in June 2023. Inflation has been consistently beating expectations on the downside over the past few months and risk assets are cheering this development. Ironically, there hasn’t been a corresponding move lower in shorter tenor risk free rates like the 1 or 2 year US Treasury. In other words, the fixed income markets are continuing to expect rates to remain higher for longer even though inflation has been declining. The Fed’s preferred gauge of Core PCE also moderated further in June (0.2% m-o-m and 4.1% y-o-y). Personal Income, on a nominal basis, increased 0.3% in June – which is near the average increase of the past 6 months. However, Real Disposable Personal Income came in relatively soft at 0.2% m-o-m. Overall real wage growth numbers have been strong in Q1 and have moderated a bit in Q2. The Employment Cost Index for Q2 (which came in the same day) was also lower than expectations at 1.0% (vs 1.1%). As long as inflation remains low, the Fed can breathe easy. Any turn in inflation numbers will bring wage growth into sharp focus again. 

30th Jun 2023

Key takeaway: Headline inflation surprised to the downside in May by a fairly substantial margin. It was little surprise that markets cheered the low inflation print. Headline inflation came in a 0.1% m-o-m, substantially lower than consensus estimate of 0.5%. The y-o-y number also hence was a surprise to the downside at 3.8%. The Fed’s 2% mandate on PCE starts to look within striking distance! However, core PCE still held firm at 0.3% m-o-m. On a y-o-y basis, Core PCE Index at 4.6% is still to high for the Fed’s comfort. The other key point to note in the latest May release was Personal Income growth at 0.4% m-o-m. However, what is even more pertinent to note is that with falling inflation real wages are growing even faster. Real personal income excluding transfer receipts grew 0.3% m-o-m. Real disposable income, which nets out taxes, grew at 0.3% m-o-m as well. These are strong real wage growth numbers. And can potentially keep boosting domestic spending. For instance – Real disposable income grew 8.5% on an annualized basis in Q1 2023. As long as inflation remains low, the Fed can breathe easy. Any turn in inflation numbers will bring wage growth into sharp focus again. 

26th May 2023

Key takeaway: Another month, another high inflation data print! Month after month, market participants and the Fed keep expecting a rapid decline in inflationary pressures and the data keeps disappointing. The PCE is the Fed’s preferred inflation gauge and hence is a key data point. The core issue is not whether inflation has peaked. That it likely has. The core issue is that the rapid decline in inflation which is necessary for the economy is nowhere to be seen. Core PCE, which is the Fed’s preferred measure which had moderated in Feb (0.4%) and March (0.3%) from a hot Jan print (0.6%), was steady once again in April at 0.4% (slightly higher than consensus expectations). The Core PCE Price Index has hovered around the 4-5% mark for almost a year now. The other key point to understand is also the constant growth in nominal wages and salaries. Personal income grew at 0.4% m-o-m in April primarily driven by an increase in wages and salaries. This continued increase in wages keeps the Fed on its toes watching out for a wage price spiral. Even the key ECI for Q1 had come in hotter than expected a month back. Lastly, real personal spending while lower than previous year levels, is still not fallen to levels seen in prior recessionary periods.

28th Apr 2023

Key takeaway: Another month of high inflation data! Month after month, market participants and the Fed keep expecting a rapid decline in inflationary pressures and the data keeps disappointing. Core PCE, which is the Fed’s preferred measure which had moderated in Feb (0.3%) from a hot Jan print (0.5%), was steady once again in March at 0.3% (in line with consensus expectations). However, the “immaculate disinflation” that people were hoping for is still not coming through. Firstly, overall personal income is keeping pace (grew 0.3% in Mar). Wages and salaries have been growing (0.3% in Mar). Personal consumption expenditures (even though flat 0% m-o-m) were higher than consensus expectations of a decrease of 0.1%. On the balance, the report – while not inflationary – does not help the rapid decline of inflation theory. This makes the 25 basis points hike in May a certainty – almost! Another key data point which came in the same day as the PCE report was the quarterly Employment Cost Index. The Fed monitors this Index very closely. ECI printed hotter than expected – at 1.2% vs expectations of 1.1%.

31st Mar 2023

Key takeaway: Core PCE, which is the Fed’s preferred measure, moderated in Feb (0.3%) from a hot Jan print (0.5%). The Jan data was also revised down from 0.6% to 0.5%. However, overall inflation levels still remain high (Core of 5% on a y-o-y basis and roughly 4.7% on a 3-month annualized basis). Hence, it is difficult to infer that the Fed will take some comfort from this moderated PCE Feb release. On the other hand, spending data for January was revised substantially higher – both nominal as well as real. Which still indicates resilient consumption. This resilient consumption is partly driven by continuing growth in nominal and real income. For instance – Compensation of employees grew 0.9% in Jan and a further 0.3% in Feb. Similarly, real disposable personal income grew 1.5% in Jan and a further 0.2% in Feb. These are solid income numbers and combined with a still healthy job market, they can keep upward pressure on inflation.

24th Feb 2023

Key takeaway: After a hotter than expected Jan CPI print, it was expected that PCE price data would be worse than most market participants were expecting a few weeks back. And it indeed was! The fact that this is officially the Fed’s preferred inflation gauge makes it that much more important. Core PCE grew at a rate of 0.6% in Jan. On a 3 month annualized basis, it amounts to 4.7% – which is way above the Fed’s comfort levels. After having recorded declines in personal consumption in Nov and Dec, both on a nominal and real basis, personal consumption shot up in Jan (1.8% on a nominal basis and 1.1% on a real basis). Most importantly though, this data release was not just about personal spending and increasing price indexes. Personal income grew at a significant rate of 0.6% m-o-m – largely driven by wages which grew at 0.9% m-o-m. That is quite concerning from the Fed’s perspective. Even, real disposable personal income – which takes into account inflation on a m-o-m basis, grew at a rate of 1.4%!

27th Jan 2023

Key takeaway: One of the most important economic data points for the start of 2023 is in and it does not disappoint. Core PCE was 4.4% for the year and 0.3% for the month of December – both figures were in line with consensus estimates. Services PCE Price Index was still relatively elevated at 0.5%, but goods PCE Price Index fell a further 0.7% m-o-m having declined 0.4% in November as well. On the downside, even though price indexes are rapidly coming down, consumption is falling fast as well. Nominal PCE fell 0.2% m-o-m after falling o.1% in November. Similarly on a price adjusted real basis, consumption decline accelerated to 0.3% m-o-m from 0.2% in November. Lastly, while nominal person income growth slowed further, the next few months will provide a clearer picture if inflation is likely to remain sticky because of robust nominal wage growth (or does a soft landing actually materialise?)

23rd Dec 2022

Key takeaway: Both, headline (at 0.1%) and core PCE (at 0.2%) moderated in November 2022 from the previous month’s reading (headline of 0.4% and core of 0.3%). But the more important point to note in this latest PCE report was that Services Inflation (that the Fed is so laser focused on), still remained quite elevated at 0.4%. Nominal wages, which are a key component of Personal Income, still grew at 0.5% m-o-m. While this can be construed as a good outcome, the real risk lies in real wages increasing substantially (with inflation coming down) and exacerbating risks of a wage price spiral. Personal spending, similar to the price indexes, showed robust increases in services and significant decline in goods consumption. Lastly, the personal savings rate remained unchanged (and relatively low) at 2.4% which evidences the economic hardship a high inflation rate places on consumers in general. 

1st Dec 2022

Key takeaway: Lets take a step back and understand why the Personal Income and Outlays data is so critical to markets. Firstly, Core PCE is the Fed’s preferred price gauge. Second, within the inflation sphere, labour inflation (which is the core of services inflation) is their prime focus. With that in mind lets evaluate the latest release. Headline PCE Price Index growth fell to 0.3% m-o-m and Core fell to 0.2% m-o-m. That was good news and in line with the big CPI positive surprise earlier in the month. However, Services PCE Price Index still increased at a substantial 0.4% m-o-m (an annualized rate of 4.8%). Second, and more importantly, nominal Personal Income driven by wages accelerated to a significant 0.7% m-o-m (the highest in the last 8 months). Finally, in another uncomfortable signal, Goods PCE Price Index increased 0.3% m-o-m after having decreased for the last 3 months. A large contributor to the increase was motor vehicles and parts. BEA data also shows that total vehicle sales in the US remain at a high of 15.9 mn annualized units and infact have increased since the May 2022 number of 13 mn. In summary, while both CPI and PCE bore good news from an inflation perspective, it is too early to say we are out of the woods. Lastly, even though nominal wages are increasing, high inflation is eating into the consumer’s spending ability and personal savings rates are continuously falling (2.3% in Oct) – which ultimately indicates a slowing economy ahead. 

28th Oct 2022

Key takeaway: There has been a bear market rally of late. Sentiment has turned a bit. Headline 3Q GDP number came in fairly strong and 3Q PCE was also a decent 1.4%. Similarly, the September PCE growth was a decent 0.3%. Unfortunately, this latest PCE report gave scant indications of softening price pressures. Core PCE Price Index still increased 0.5% m-o-m similar to August. In fact the fall in goods prices moderated in September, while Services kept up its pace of increase. To make matters worse, wage growth further accelerated to 0.6% in September from 0.3% in August.  

30th Sep 2022

Key takeaway: Unfortunately, similar to the August CPI read, PCE for August also came in worse than expected despite a fall in energy costs. Core PCE, which is the most important indicator for the Fed, rose a significant 0.6% m-o-m. Headline PCE rose 6.2% for the year. These numbers are still far outside the Fed’s comfort zone. But there are a few more points to note. For a few months now, we have had a consistent fall in goods consumption and the goods price index. But that has been more than offset but the consumption and consequent price rise of Services. The second positive point to note was that wage growth moderated to 0.3% (from 0.8% in July).  

26th Aug 2022

Key takeaway: I think this was a mixed report. Here’s why. Firstly, core inflation continued to moderate. Core PCE in July increased only 0.1%. Headline PCE was negative 0.1% m-o-m, but that was expected given the fall in gasoline prices in July. Unfortunately, markets were laser focused today on Powell’s JH hawkish speech and ignored a favorable inflation reading. On the other hand though, compensation increased at a brisk pace of 0.8% in July. Wage price pressures are the key focus area for the Fed and they likely would be concerned with continued wage gains.  

29th July 2022

Key takeaway: After a dip of 0.3% in May, real PCE was back up – but only 0.1%. Disposable Personal Income, meanwhile, is failing to catch up – falling 0.3%. i.e. There is lesser money in people’s pockets for spending. PCE, the preferred Fed inflation gauge, climbed back up again to 6.8% y-o-y in June compared to 6.3% in May (Core inflation also climbed back up again to 4.8% from 4.7%). The monthly PCE increase was a bit of a shocker as well (1.0% compared to 0.6% in May). There will be one more PCE print and 2 more CPI prints before the next Fed meeting on Sep 20th. It is a cliché repeated so very often – but those prints will be key to the “Fed pivot”! 

30th June 2022

Key takeaway: It was one of those days in markets, when all news is bad news! Core inflation is showing all the necessary signs of slowing. But more importantly the quantum of these inflation slowing signals is not sufficient for a Fed pivot. Key points from this release : a) Core PCE slowed down to 4.7% (fourth continuous month of decline).  b) Revised real consumption numbers now show that consumption in the first 4 months was lower that reported earlier. Those accumulating Target inventories make even more sense now! c) May was the first time in many months that real consumption actually decreased m-o-m! d) Most figures came in lower than consensus estimates.  

The next CPI release is on Jul 13th and the Fed meets post that on 26-27th. If headline CPI moderates, there is a good chance that the next rate hike settles at 50 instead of 75!

27th May 2022

Key takeaway: There are lots of key points to note in this release. Firstly, core PCE – which is the Fed’s preferred measure, moderated in April : 4.9% vs 5.2% in March. However, that was not the only positive development. Consumption continued to be strong. Real PCE – adjusted for inflation – increased 0.7% in April. And that on the back of a strong Jan, Feb and March. However, consumers are dipping into their savings. While income rose, it is simply not enough to cover price increases. Savings rate fell to 4.4% from 5% in March 22 (Sep 2021 was 8.1%!)

29th April 2022

Key takeaway: The March 22 Personal Income and Outlays release once again shows that the US consumer is very strong. The Feb release had cast some doubt on the strength of consumer spending when Feb real PCE fell 0.4%m-o-m. But the Feb figure was revised upward to +0.1% and March real PCE was up 0.2% m-o-m.  Spending on goods fell and spending on service rose – as expected. But, inflation remains stubbornly high, impacting consumers ability and willingness to spend. Real Disposable Personal Income fell 0.4% m-o-m.

31st Mar 2022

Key takeaway: Post this release, a lot of news headlines might scream “consumer spending slows sharply!”. Lets not get carried away yet. This is just one data point. Inflation adjusted consumer spending indeed fell 0.4% m-o-m in February. But, January numbers had been unusually strong (+2.1%). Spending on goods fell and spending on service rose – quite as expected. But if these numbers keep trending down, then the inflationary impact on people’s ability and willingness to spend would become evident! Keep tracking…

25th Feb 2022

Key takeaway: Inflation adjusted consumer spending had fallen by 1% in December 2021, probably because of a pull forward of purchases in the holiday season. Consumption in Jan 2022, on the other hand, has surprised to the upside. The rise in nominal spending is then, not just on account of price rises, but also attributable to simply increased consumption. Tailwind for monetary policy tightening!

 

Bureau of Economic Analysis