October 3

10/3 - The Personal Consumption Expenditures (PCE) price index rose 6.2% year-over-year in August, down from 6.4% in July. This is the Fed’s preferred statistic for gauging inflation with a target of 2.0%. The largest contributors to the increase were spending for housing/utilities (+8.6%), transportation (+16.9%), and health care (+5.0%). The core PCE (less food and energy) jumped to 4.9% from 4.7% in July. Energy spending declined from July but is still 25.3% above a year ago. Grocery spending jumped 0.7% from July and is 6.2% above a year ago. A strong job market and wage increases are helping consumers keep pace with inflation. But the personal savings rate, which averaged 14.3% for 2022/2021, is just 3.8% so far in 2022. Americans are quickly using up their pandemic savings just to keep pace with inflation – and current spending levels are not sustainable.