Stagflation Scenario Slammed As Fed's Favorite Inflation Indicator Tumbles To Four Year Lows
The Fed's favorite inflation indicator - Core PCE - printed cooler than expected in March, unchanged MoM (vs +0.1% exp), bring prices up 2.6% YoY - the lowest since March 2021...
Source: Bloomberg
...with non-durable goods deflating MoM the biggest drag on Core PCE
...but, but, but we were told tariffs would spark hyper-super-scary-inflation?
The headline PCE was -0.045% MoM - the biggest MoM drop since COVID lockdowns...
...dragging headline PCE YoY down to +2.3%...
SuperCore PCE also saw the YoY pace slow significantly...
Spending outpaced incomes significantly in March...
Source: Bloomberg
Which means that the savings rate fell to 3.9% from 4.1% in February, which was revised lower from 4.6%...
Adjusted for inflation, real personal spending surged 0.7% MoM (not a total surprise given that 'consumers' are panicking over an imminent surge in inflation, of course they should be spending)....
It appears DOGE is doing its jobs too - crushing govt wage growth
March Government worker wages and salaries up just 2.9%, down from 3.2% in Feb and the lowest since Sept 2020
March Private worker wages and salaries up 5.4%, down from 5.7%, and lowest since Dec 2022
...and there goes the stagflation scenario.