Key Fed inflation gauge at 2.2% in August, lower than expected

[BumRushDaShow]

Source: CNBC

Published Fri, Sep 27 2024 8:32 AM EDT Updated 19 Min Ago


Inflation moved closer to the Federal Reserve’s target in August, easing the way for future interest rate cuts, the Commerce Department reported Friday.

The personal consumption expenditures price index, a measure the Fed focuses on to measure the cost of goods and services in the U.S. economy, rose 0.1% for the month, putting the 12-month inflation rate at 2.2%, down from 2.5% in July and the lowest since February 2021. Economists surveyed by Dow Jones had been expecting all-items PCE to rise 0.1% on the month and 2.3% from a year ago.

Excluding food and energy, core PCE rose 0.1% in August and was up 2.7% from a year ago, the 12-month number 0.1 percentage point higher than July. Fed officials tend to focus more on core as better measure of long-run trends. The respective forecasts were for 0.2% and 2.7% on core.

“All quiet on the inflation front,” said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley. “Add today’s PCE Price Index to the list of economic data landing in a sweet spot. Inflation continues to keep its head down, and while economic growth may be slowing, there’s no indication it’s falling off a cliff.”

Read more: https://www.cnbc.com/2024/09/27/pce-inflation-august-2024.html

---

Article updated.

Previous articles -

Published Fri, Sep 27 2024 8:32 AM EDT Updated 8 Min Ago


Inflation moved closer to the Federal Reserve's target in August, easing the way for future interest rate cuts, the Commerce Department reported Friday. The personal consumption expenditures price index, a measure the Fed focuses on to measure the cost of goods and services in the U.S. economy, rose 0.1% for the month, putting the 12-month inflation rate at 2.2%, down from 2.5% in July.

Economists surveyed by Dow Jones had been expecting all-items PCE to rise 0.1% on the month and 2.3% from a year ago.

Excluding food and energy, core PCE rose 0.1% in August and was up 2.7% from a year ago, the 12-month number 0.1 percentage point higher than July. Fed officials tend to focus more on core as better measure of long-run trends. The respective forecasts were for 0.2% and 2.7% on core.

Though the inflation numbers indicated continued progress, the personal spending and income numbers both came in light. Personal income increased 0.2% on the month while spending rose 0.2%. The respective estimates were for increases of 0.4% and 0.3%.

Published Fri, Sep 27 2024 8:32 AM EDT Updated 5 Min Ago


Inflation moved closer to the Federal Reserve's target in August, easing the way for future interest rate cuts, the Commerce Department reported Friday.

The personal consumption expenditures price index, a measure the Fed focuses on to measure the cost of goods and services in the U.S. economy, rose 0.1% for the month, putting the 12-month inflation rate at 2.2%.

Economists surveyed by Dow Jones had been expecting all-items PCE to rise 0.1% on the month and 2.3% from a year ago.

Excluding food and energy, core PCE rose 0.1% in August and was up 2.7% from a year ago. Fed officials tend to focus more on core as better measure of long-run trends. The respective forecasts were for 0.2% and 2.7% on core.


This is breaking news. Please check back for updates.

Original article -

Published Fri, Sep 27 2024 8:32 AM EDT


The personal consumption expenditures price index was expected to increase 0.1% in August and 2.3% from a year ago, according to the Dow Jones consensus estimate.

This is breaking news. Please check back for updates.

[BootinUp]

1. "soft landing" may be understating it. nt

[sinkingfeeling]

2. Has Donnie placed an order for a case of ketchup to celebrate

this news?

[progree]

3. Graphs and summary table of all 3 inflation measures (PCE, CPI, PPI)

The inflation situation as of the release of the PCE Inflation Index (Fed's preferred inflation gauge) on 9/27/24. Here is a summary table followed by the graphs.

CME Fedwatch tool (predicts Fed interest rate changes):https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.

ALL the numbers are the seasonally adjusted ones

The "1 month" number is the change from July to August expressed as an annualized number. Except the PCE is the increase from June to July, also annualized.

The "3 month" number is the growth over the last 3 months (and then annualized). It is calculated based on the change in the index number between the latest one and the one 3 months previous. e.g. if the latest index value is 304 and the one 3 months previous is 300, then the 3 month increase is 1.333333%
. . . (304/300 = 1.01333333 => [subtract 1 and multiply by 100%] => 1.333333%)
Annualized, it is 5.4%
. . . (1.01333333^4 = 1.0544095 => [subtract 1 and multiply by 100%] => 5.44095% => 5.4%).
. . . Most people just multiply the 3 month increase by 4 to annualize it: 1.333333%*4 = 5.333333% => 5.3% which isn''t technically correct (it leaves out compounding) but it is close for small percentage changes.

"Regular" is the "headline" number that has "everything"

"Core" is the regular with food and energy removed (The Fed prefers this as a basis for projecting FUTURE inflation)

Finally, the main summary table
All are seasonally adjusted and ANNUALIZED
PCE-Personal Consumption Expenditures Price Index (Fed's favorite inflation measure)
CPI-Consumer Price Index (retail)
PPI-Producer Price Index (Wholesale prices)
Links to the data are with the graphs below



Average real (i.e. inflation-adjusted) hourly earnings are up over the past 2 years and are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013

And now the graphs, in the following order:

* Core PCE and Regular PCE (Core PCE is the Fed's favorite for projecting FUTURE inflation), released 9/27/24

* Core CPI and Regular CPI

* Wholesale inflation - Core PPI and Regular PPI

CORE PCE through AUGUST that came out 9/27/24 (PCE=Personal Consumption Expenditures price index)
CORE PCE (seasonally adjusted): https://fred.stlouisfed.org/series/PCEPILFE
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"

This is the one that the Fed weighs most heavily. The Fed weigh the PCE more heavily than the CPI. And in both cases, they weigh the CORE measures higher than the regular headline measures for projecting FUTURE inflation



Regular PCE through AUGUST that came out 9/27/24
Regular PCE (seasonally adjusted): https://fred.stlouisfed.org/series/PCEPI
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"




CORE CPI through August that came out 9/11/24
CORE CPI (seasonally adjusted) http://data.bls.gov/timeseries/CUSR0000SA0L1E
BLS CPI news release: https://www.bls.gov/news.release/cpi.nr0.htm



The Regular aka Headline CPI through August that came out 9/11/24 (CPI=Consumer Price Index)
Regular CPI (seasonally adjusted) https://data.bls.gov/timeseries/CUSR0000SA0
BLS CPI news release: https://www.bls.gov/news.release/cpi.nr0.htm



Some Additional CPI Series of Interest
Shelter, which is pretty much all rent -- either regular rent or "owners' equivalent rent", has been a problematic issue -- because changes in new rents take several months before they appreciably move the CPI (because of the inertia of 11 months of older rents). It is the largest component of the Core CPI and one of the largest of the regular CPI. Through August, shelter remained elevated at 0.4% month over month for several months, except for a smaller 0.2% increase in June., and a larger 0.5% increase in August. Year-over-year, shelter is up 5.2%

Shelter: https://data.bls.gov/timeseries/CUSR0000SAH1

Core Inflation less Shelter: https://data.bls.gov/timeseries/CUSR0000SA0L12E
^--This is up 0.0% for 3 months in a row, followed by +0.1% in August. The 3 month annualized average is +0.0% (compare to core of +2.1%)

Click on "More Formatting Options" on the upper right hand of screen, and on the page that appears, choose some or all of: "1-Month Percent Change", "3-Month Percent Change" and "12-Month Percent Change".

Headline CPI and Fed Rate Action

November 2019 through August 2024

The first tentative little quarter point rate increase was March 17, 2022, 12 months after year-over-year inflation went north of 2% in March 2021, and had reached 8.5%.

I'm fond of the 3 month averages as they are an average of 3 data points (so can't be easily dismissed as a "one off", unlike a single month-over-month figure), and they have much more recency than 12 month averages (yoy). I think of them as kinda a smoothed version of month-to-month.

FedFunds Target Rate (I used the upper end of the 0.25% width bracket): https://www.federalreserve.gov/monetarypolicy/openmarket.htm



WHOLESALE INFLATION (PPI - the Producer Price Index)

https://www.bls.gov/news.release/ppi.nr0.htm

As for which core PPI measure, since the BLS highlights the one below (without food, energy, and trade services) in its reporting (as opposed to the one without food and energy), then I guess I should do likewise. Trade services bounce around a lot from month to month, so I think excluding them from a core measure is the right thing to do.

CORE PPI (excluding food, energy, trade services) through August that came out 9/12/24:
CORE PPI (seasonally adjusted) http://data.bls.gov/timeseries/WPSFD49116



===========================================================

Regular PPI through August that came out 9/12/24 ( includes "everything" ):
Regular PPI (seasonally adjusted) http://data.bls.gov/timeseries/WPSFD4

[BumRushDaShow]

4. I felt the rumble

pulled out my handy dandy telescope and aimed it through the cloud-obscured sky towards the northwest, and finally spotted the source that I suspected!

[kansasobama]

5. But some GOP-MAGA Latino voters in Arizona still complain

That inflation is high and the felon will save them

[CountAllVotes]

6. Bunch of B.S. imo

Hamburger at $9+ a lb.

I don't believe this for one second. Sorry.

[bucolic_frolic]

7. I can relate to that

ALDI was an eye-opener this week. Many items were up. Spices from .99 to 1.09. Fewer markdowns. But I will say grocers make their money in Q4 when people are buying for the holidays. Major grocer had the same meltups in prices. But super discounter (not Walmart) had some real bargains, which disappeared fast.

This is 1977 all over again. Fed unwilling to have recession, so cuts rates too early. Now we go for more inflation. Feds won't balance budget, so more deficits and borrowing. Prepare for more inflation. Each successive wave is somewhat bigger than the last.

[CountAllVotes]

9. That is how I see it too

Glad to know we are on the same page.

[BumRushDaShow]

10. Where are you?

I literally just got back from the supermarket about 45 minutes ago here in Philly (Acme Markets which is part of Albertsons) and saw family packs of 80/20 ground beef at half that (running ~$4.67lb).

Last week I happily decided to go for it for some recipes and bought a pack of 30 eggs that had a "digital coupon" for $4.99, which comes out to about $2.04/dozen which around here is good (vs the bird flu price the year before last of $6/dozen).

[maxsolomon]

11. One could spend $9/lb on ground beef in Seattle.

If they buy Wagyu at my local Bougie grocery.

People expect DEflation. It's not going to happen.

[BumRushDaShow]

13. I think some of the name-brand Wagyu here at my market

is like the same price as of the baby lamb chops - like $12.99/lb.

[SWBTATTReg]

17. Perhaps in some housing districts, where housing has gone up thru the roof, e.g., in FL, other places. These

places probably could use a cooling off period, as its probably hurting the normal run-of-the-mill young couples trying to buy their first home, etc.

[progree]

12. Nothing in your OP or its linked article is inconsistent with ground beef being $9/lb somewhere

Some people just don't understand that overall, on average, prices are rising, and that's exactly what almost all [1] these inflation reports are saying -- even this one with a 0.1% month over month *RISE* in prices on average, and 2.2% year over year RISE in prices.

They seem to think a good inflation report, or one softer or better than expected that the media is ballyhooing means prices are coming down. No, that's not what they mean, they mean they are NOT *RISING* AS FAST as expected or not rising as fast as before.

Nor do they understand that the Federal Reserve is targeting a 2% per year *RISE* in prices.

But oh well.

Oh, my last ground beef purchase, 85% lean was $6.49/pound on Sept 3. Last eggs were $4.49/dozen (yikes) Sept 18.

[1] (well there is occasionally a negative month-over-month number, but haven't seen a negative year-over-year (yoy) in years -- there were 3 months in 2015 when the yoy number was -0.1% or -0.2%, and several such months in 2009 in the aftermath of the housing bubble crash, but none since 2015 -- looking at the CPI https://data.bls.gov/timeseries/CUSR0000SA0
)

[BumRushDaShow]

14. Actually yes - the price "rise" (slope of the line) is LESS than it has been in the past

Last edited Fri Sep 27, 2024, 02:44 PM - Edit history (1)

Meaning their 'baked-in "acceptable' annual 'rise'" is 2% per year.

The hope is it might one day get close to "flat", and we are not quite at a -% "rise" (meaning net lowering) of prices - at least in some sectors, although others have come down (e.g., some things earlier impacted by environmental factors like avian flu that have resolved).

I think there are "market basket surveys" that show what has gone up and down over a period.

[progree]

15. There are breakdowns into broad and sometimes narrow categories

I think there are "market basket surveys" that show what has gone up and down over a period.

The CPI has breakdown at
https://www.bls.gov/news.release/cpi.nr0.htm
with links to tables showing further subcategories

Similarly for today's "bunch of BS" PCE report
http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm
which this month morphs into
https://www.bea.gov/news/2024/personal-income-and-outlays-august-2024
In Table 5 in the news release - choose Related Materials -> Full Release and Tables, NOT Tables only
Well, darn, not much of a breakdown, just the PCE, Core PCE (ie without food and energy), food, energy
and that's it. I don't know where they have finer details. And the darn thing doesn't even show year-over-year, it just shows index values month by month from January 2024 onward. But anyway,
Food: +0.28% (August over January, not annualized)
Energy: -0.40% (ditto)

[BumRushDaShow]

16. I don't think they would have that data

but a number of research organizations actually have a set combination of "commonly purchased products" for their "basket" and track the prices of that over time.

USDA does it I think to determine data for SNAP, WIC, etc. - https://www.fns.usda.gov/research/cnpp/usda-food-plans
USDA monthly reports - https://www.fns.usda.gov/cnpp/usda-food-plans-cost-food-monthly-reports

They apparently contract that out. This is a link to an old contract page describing it from the previous administration - https://www.fns.usda.gov/usda-fis/market-basket-analysis-when-procuring-program-goods-and-modifying-contracted-product-lists

Haven't had chance to dig deep to see what the Biden USDA is doing with it but I expect it's similar with the contracting.

[BumRushDaShow]

29. And then look what I found

https://www.salon.com/2024/09/23/inside-the-very-very-guarded-agreements-dictating-whats-sold-in-grocery-stores/

(I knew some of it but not all)

[COL Mustard]

8. It was all staged--it's a hoax!!!!

Say all Freepers in unison, as soon as TSF puts out the talking point. As if the Government could possibly stage something like that.

I work in long-range budgeting and even with annual NDAs and stark reminders there's always one person who wants to do someone a favor and puts out information they shouldn't.

[The Mouth]

18. I'm on a fixed income.

The inflation we have now is a permanent pay cut.

The utter uncaring of many on both sides was a 'Fuck You' to pensioners, almost everyone I know is royally fucked compared to a few years ago.

I will give two shits, or any credit when it costs me the same to heat my house or buy a tank of gas as it did in 2019 or even 2021.

Fuck inflation and anyone who doesn't regard it as *the* most existential threat facing working and retired people.

This all is pissing on the burned-down house after everything is damaged.

At least Jimmy Carter, and hell, even Gerald Ford, 'got it' in the 1970's: inflation is just-this-side of incoming nuclear missiles or a wildfire about to burn up houses and people in terms of importance and urgency relative to *ANY* other issue.

[CountAllVotes]

19. +1

N/T

[Elessar Zappa]

20. Well, the chances of prices going back to 2019 levels is almost zero.

Neither party can do anything to change that. The best we can hope for is for inflation to stay at normal rates, which is way more likely if Harris is in office rather than Trump, who doesn’t give a damn about people on fixed incomes.

[progree]

22. Prices are up 19.3% since 8/2019 according to the PCE, and 22.7% according to the CPI

8/2019 to 8/2024
PCE: https://fred.stlouisfed.org/series/PCEPI
CPI: https://data.bls.gov/timeseries/CUSR0000SA0

So reversing all that should be possible with 1930's style Great Depression and a little political willingness to endure a little hardship.



============================================
Interestingly, real median household income (i.e. adjusted for inflation) exceeded 2019 levels in 2023 per September 2024 Census Bureau report
https://www2.census.gov/library/publications/2024/demo/p60-282.pdf

Average real (i.e. inflation-adjusted) hourly earnings are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013

[Elessar Zappa]

23. What should've been done was a flat amount increase for people on SS, SSDI, and SSI.

Maybe like a $200 raise for everyone. After all, the prices we pay don’t go up or down based on income. I realize this would cost a lot but I think it should be done.

[BumRushDaShow]

21. I'm on a "fixed income" too (as a retiree, with any COLA subject to the whims of fucking Congress)

Probably half of DU is on some kind of "fixed income".

I remember back in the '70s when you could get 4 (1lb) loaves of bread for $1 "on sale". Today you're lucky to get one loaf for under $3.

There's no one claiming there is "no inflation". But there is an amnesia about what prices were in the past compared to today AND what the average salaries were in the past versus today.

The biggest issue is having wages/retirement income able to keep up with those rising costs and under Biden, it has more so than any previous modern President.


(from here - https://www.whitehouse.gov/cea/written-materials/2024/06/12/both-sides-of-the-ledger-wage-growth-beating-price-growth-now-for-15-months-in-a-row/)

The ones dealing with the worst of this are those that have pensions with no COLA, and those who either lost their pensions when their companies went bankrupt or who worked for a company with no pensions, and were left to rely on SS alone.

And since you bring up the '70s, the economy, particularly with interest rates, was sadly horrible -



What is going on now is not "general inflation", it is PRICE GOUGING by corporations... because they can.

When Carter tried "price controls" for gas prices, he was utterly destroyed.

[CountAllVotes]

25. COLA

I worked for many years before I became to ill to work any longer.

I receive a pension with handsome benefits that go with it.

However, as for the financial aspect of this great pension, I receive a 2% increase a year thanks to being in a Union job.

I was dumped two weeks after my DX with a pension of $50.00 a month. That pension is now a whopping $104.00 a month

Whoopie!

& recommend.

[The Mouth]

26. That inflation surge destroyed my family, essentially

But at least Carter (and even Ford) give it a hell of a lot more concern than I've heard from left or right for the last 4 years. The party has other priorities than old people on fixed incomes subject to the whims of inflation. We don't march in the streets, we merely vote sanely (which is Democratic, of course). Other issues get action in the streets and the energy of party leaders but we old folks can just go off and die in poverty, we should be grateful for the occasional increase in SSI or the occasional white house fulminating about corporations (the same ones that contribute a lot of money to people in both parties). The pubbies want to use it to win the election, of course- not that they really give a shit- but tha5t doesn't mean that it's an existential issue for my voting block. I'd sure as hell like to see VP Harris outline what, when, and how she is going to do something about this, with numbers an a SENSE OF FUCKING URGENCY EQUAL TO ANYTHING OF THE LAST 10 YEARS. But I'm on old dude who should probably just drop dead as far as the people who have other issues are concerned.

[CountAllVotes]

27. Agree

I too would like to know how this is going to be done, if at all.

It is a waiting game. How long can you wait when you are old, alone and without any help at all if you aren't licking the soles of what marginal dole is out there?

Hang-in there. I wish I could add more to what you have stated.

[BumRushDaShow]

28. 'The party has other priorities than old people on fixed incomes"

I guess you missed this (where the effort started over a dozen years ago) -

And as a follow-on to all of this, be aware that ALL of the effort that is being put into exposing "Project 2025" is partly BECAUSE of its caveats to gut and eventually eliminate Social Security, Medicare, and any other social safety net.

Unfortunately since the Project 2025 document is over 900 pages long, the Democratic Party "exposures" of it have been broken down into different "topics", but here is a comprehensive thing about it (event starts at 16.53) -

I think the "problem" here is how one consumes "news" and "messaging" and the changes in "communications" caused by technology.

I.e., for some, if it's not "seen" on their local TV or newspaper, then "no one is doing anything about the problems or talking about them". I don't how to address that other than to say that if someone frequents DU, then they have some access to "technology" and "information" and these topics have been covered extensively here all over the place - whether as "news" or "commentary" or with the posting of videos with political figures and analysts discussing it, including elected officials who have attempted to address some things through legislation.

And as a note that I posted before - half of DU is "old" (meaning between 50 - 80+), so you are yelling at the choir.

[The Mouth]

30. Well, I wish the choir was yelling at the pastor

It should be agenda item #1.

[CountAllVotes]

24. Is the real message this?

Go ahead a die you old people.

We've been waiting on it for too long! We have to WORK and we don't like this option so just go ahead and die for the sake of those of us that want that money now!

******
Sadly, when the time comes, its looking like not a dime will be left. I'll be lucky to have a car to live in if this continues. If anything is left, it is willed to care for my cats, the only living thing I have around me that seems to give a damn.

The sheer GREED of others never fails to astound me.

Read your Bible they say.

I did and yes, GREED is one of the seven deadly sins no matter which Bible you read, its all right there.

The kid up the street was offering to pull weeds for $30/hr.

I did it for nothing or for fifty cents for an entire day of work if I got anything at all.

I sent him on his way and he was ashamed when I told him that I cleaned filthy houses for $2.00/hr. Not $200.00, not $20.00, $2.00, aka $16.00 a day for ass busting work cleaning up the filth of others. All under the table work it was for a 16 year old teenager that needed money to buy necessities with. I grew up poor and I'm still poor.

So you end up with next to nothing thanks to inflation, the killer of all killers amongst us. Kinda evil at best.