The Fed’s preferred inflation gauge, the core personal consumption expenditures price index increased 5.4% from a year ago, the largest increase in nearly 40 years. Federal Reserve officials consider the PCE gauge to be the most reliable inflation indicator.
Excluding food and energy prices, the personal consumption expenditures price index increased 5.4% from the same period in 2021, the biggest jump going back to April 1983.
Including gas and groceries, the headline PCE measure jumped 6.4%, the fastest pace since January 1982.
Surging prices dented consumer spending, which rose just 0.2% for the month, below the 0.5% estimate. Disposable personal income increased 0.4%, a touch below the 0.5% expectation, while real disposable income fell 0.2%.
The Fed has reacted to rapidly surging inflation by tightening policy, with an interest rate increase in March expected to be followed by hikes at each of the remaining six meetings this year.
Reacting to U.S. personal consumption rising 5.4% year-over-year in February, Fox News contributor and The King’s College economics professor Brian Brenberg warned the data point is a “flashing red signal” for the economy on “Varney & Co.” Thursday.
Brian Brenberg: It’s a bad number. It’s the worst we’ve seen since 1983. So we’re still in that 40-year high inflation issue… Everybody’s concerned about food and fuel. It’s a bad number. It’s the kind of number where you start to say, is the Fed going to raise by 50 basis points instead of 25 basis points? It’s a red flashing signal for an economy that has a lot of them, not a good number.
MacDailyNews Take: Obviously, inflation is an ongoing concern for everyone – and every company – involved in the U.S. economy and declines in consumer electronic sales directly impacts Apple.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Earlier this year, Interactive Brokers founder Thomas Peterffy said, “Inflation is 7% — 1% or 2% [in interest rate hikes] doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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