Economic data released in the United States on Wednesday has raised concerns, with Core PCE inflation climbing to 2.8% in October.
The Personal Consumption Expenditures (PCE) report, a key measure of consumer spending, serves as the Federal Reserve's preferred gauge for tracking inflation trends.
These reports have been signaling a rising cost of living in the US since July. Now, with all three major inflation gauges showing an upward trend, the data underscores mounting economic pressures.
Compounding Inflation
These reports reveal a growing cost of living since July, with inflation gauges rising simultaneously for the first time since February 2022.
“The elephant in the room is that inflation has plateaued well above the Fed’s 2% target,” remarked The Kobeissi Letter. It further emphasized that Core CPI has remained above 3% for 42 consecutive months, the longest streak since the early 1990s, signaling persistent compounding inflation.
Adding to the inflationary pressure, proposed tariffs on imports from China, Canada, and Mexico could further escalate consumer prices. Economists from Goldman Sachs predict that such tariffs would have a direct impact on Personal Consumption Expenditures, exacerbating the already concerning trend.
Impact on Crypto
The rising inflation could complicate the Federal Reserve’s monetary policy, potentially leading to a more hawkish stance. Such moves could strengthen the dollar while applying downward pressure on risk assets, including cryptocurrencies. The crypto market's bullish momentum could face headwinds as investors adjust to the evolving economic landscape.
