US Personal Income and Spending: Firmer inflation but not enough to stay Fed’s hand - Wells Fargo

The personal income and spending report showed the Core PCE at 1.6%; according to analysts at Wells Fargo is not enough to dissuade the Federal Reserve from interest rate cuts.

Key Quotes: 

“A softening in the core PCE deflator earlier this year was a big factor in the Fed’s shift to a more accommodative stance. That key measure of inflation rose to 1.6% today and the sequential increase in recent months suggests modestly firmer footing in Q2, though not enough to dissuade the Fed from cutting rates.”

“The backdrop for today’s print was not terribly encouraging. Consumer spending was downgraded to just 0.9% growth in Q1 with this week’s revision, and the Conference Board’s measure of consumer confidence fell to its lowest level since 2017.”

“Spending increased 0.4% in May. Although that was a tenth shy of consensus estimates, April’s personal spending was revised up by three tenths of a percentage point.”