An important inflation gauge the Fed uses to set policy rose again in May. The core personal consumption expenditures price index jumped by 3.4% last month, the fastest rate increase seen since 1992. The index increase reflects the rapid pace of economic expansion and resulting price pressures. It also amplifies how far the nation has come since the pandemic-induced shutdown. In other news, gold and silver prices were moderately higher in early U.S. trading Friday. August gold futures were last up $9.30 at $1,785.70 and July Comex silver was last up $0.23 at $26.28 an ounce.
CNN Business/Anneken Tappe
Key inflation measure climbs to highest level since 1992
Prices rose yet again in May and a key measure of inflation hit new multi-year highs.
The price index tracking personal consumption expenditure, or PCE, climbed 3.9% in the year ending May, the Bureau of Economic Analysis reported Friday. It was the highest level since August 2008 and exceeded April’s 3.6% level.
Similarly, core PCE inflation, which strips out more volatile components like food and energy, stood at 3.4% over the same period — the highest level since April 1992.
Prices for American consumers and producers have been rising for months on the back of the great reopening, supply chain issues and material shortages. Economists are beginning to worry that if inflation rises too far too fast, people will curtail their spending, which would be bad news for the recovery.
Personal incomes slipped 2% in May and disposable incomes fell by 2.3%, driven by a decrease in government benefits. But consumer spending was nearly unchanged, increasing less than 0.1%.The personal savings rate was 12.4%, the lowest level since February.
Meanwhile, investors are anxiously watching the Federal Reserve, which is mandated to keep prices level and unemployment low. As the nation is emerging from the pandemic, neither is taking place.
You can read the full story, here.
Kitco News/Jim Wyckoff
Gold, silver post price advances ahead of key U.S. inflation data
Gold and silver prices are moderately higher in early U.S. trading Friday. Some short covering in the futures market and some bargain hunting in the cash market are featured heading into the weekend. August gold futures were last up $9.30 at $1,785.70 and July Comex silver was last up $0.23 at $26.28 an ounce.
On tap this morning in the U.S. is the personal income and outlays report for May, which is seen down 2.7% from April. The PCE price indexes will be closely watched for their inflation implications, as it’s been said the Federal Reserve very closely follows those indexes. The PCE core price index is expected to come in up 3.4%, year-on-year versus a reading of up 3.1% in April.
Global stock markets were mostly higher overnight. The U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins and are at or near their record highs. There remains little risk aversion in the global marketplace at present, amid a generally calm geopolitical environment. U.S. traders and investors are more upbeat Friday as President Biden on Thursday announced a bipartisan infrastructure spending plan. However, the plan still faces hurdles before it becomes law.
Keep reading, here.
Powell keeping interest rates low will result in more money coming in: Market strategist
Slatestone Wealth chief market strategist Kenny Polcari argues as long as the Federal Reserve Chairman Jerome Powell continues to convince the public ‘there is nothing to worry about,’ there is ‘no alternative’ to a bull market.
Watch the full video, here.