Here’s How New Personal Consumption Data Compares to the Past
The January Personal Income and Outlays report was published today by the Bureau of Economic Analysis. The chart below shows the monthly year-over year change in the personal consumption expenditures — PCE — price index since 2000. I’ve also included an overlay of the Core PCE (less Food and Energy) price index, which is a key measure watched by the Fed as a gauge of inflation.
The Headline PCE index has increased slightly in its annualized rate from 1.18% to 1.22% over the past month. The Core PCE index also increased slightly from 0.77% to 0.81%.
I’ve expressed the index change to two decimal points to highlight the change more accurately. Case in Point: Last month’s annualized Core CPE expressed to one decimal was 0.7%, the smallest increase on record. To two decimal places it was 0.74%. This month the December Core PCE was revised upward to 0.77%, which rounds to 0.8%. December still holds the record for the Core PCE low, but that distinction is lost at one decimal place because the January Core at 0.81% rounds down to an identical 0.8%.
It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision). But PCE is a key measure of inflation for the Federal Reserve, and the recent price increases in oil and gasoline puts consumer behavior in the spotlight.
For a long-term perspective, here are the same two metrics spanning five decades.
(Note: I use the data from Table 9 in the full release and tables available here.)
Doug Short Ph.d is the author of dshort.com.
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