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Fed’s ‘Favorite’ Inflation Indicator Hotter Than Expected At 40-Year Highs

Courtesy of ZeroHedge View original post here.

Following December's mixed bag (spending down, income up), analysts expected January to reverse that trend but instead, incomes were unchanged and spending rise by a shocking 2.1% MoM…

Source: Bloomberg

That is the biggest MoM jump in spending since March 2021 and given the lack of income gains, sent the savings rate plunging to just 6.4% of DPI – the lowest since Dec 2016!

However, Personal Income tumbled 2.1% YoY (largely thanks to stimulus/base effects), which is the biggest YoY drop since Nov 2009 (spending growth slowed but remains strong)…

Source: Bloomberg

On the wages side, Private wages are up 11.2% YoY, highest since October (and up from +10.7% in Dec), while Govt wages are up 4.8%, unch from Dec.

Finally, and probably most importantly, is The Fed's favorite inflation indicator – PCE Deflator – printed at new cycle highs back to the early 80s…

Source: Bloomberg

Core PCE rose 5.2% YoY as expected (up from +4.9% YoY in Dec), but the headline PCE Deflator rose 6.1% YoY (up from +5.8% prio and above the 6.0% exp).

Not good news for those hoping the Russian ripples will slow The Fed's roll.


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