Link: https://www.cnbc.com/2024/04/26/pce-inflation-march-2024-key-fed-inflation-measure-rose-2point8percent.html
Bad news from a key indicator's report on the 27th left the market with little hope of an interest rate drop this upcoming month, and core (excludes food & energy) personal consumption expenditure (PCE) numbers for March 2024 came in at 2.8% from a year ago (March 2023).
This is especially discouraging for investors as core PCE is an important indicator to the FED, as they have relied on it historically to base their rationale to decisions made by the board. The initial estimates aimed to have core PCE come in at 2.7%, and all-item PCE (less important) come in at 2.6%. The actual numbers from March were 2.8%, and 2.7%, respectively.
Other bad news came in from inflation reports with consumer spending coming in higher than expected, and the opposite happening for consumer savings. This will likely lead to the FED keeping interest rates where they are at, as necessary signs of inflation slowing have not shown yet.
Despite the results, shockingly usually reactive markets opened high Thursday morning, after coming off a bad week of decreases. I'd expect this to be a sign of market ignorance, as investors spent all of last week watching the market tumble, this is probably just investors in the market tired of the pitfalls, and blissfully turning away from the negative reports.
3 comments:
I wonder what specific factors contributed to the unexpected increase in core PCE numbers for March 2024?
I wonder if the market ignorance is just a way of keeping the economy in a positive mindset? Because we know what happens when the people within the economy start to have doubts and fear...
It is interesting how resilient the economy has been through the rate spikes from the Fed, although this is good now since it is maintaining growth I wonder how long it will take to actually see inflation begin to fall.
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