In-depth interpretation of the PCE data in the United States in April:
Just now, I focused on the PCE data of the Bureau of Economic Analysis of the U.S. Department of Commerce. The reason why the annual rate of core PCE in April continued to remain high is due to the increase in service consumption.
Look at the data:
Personal income increased by 65.3 billion in April (a monthly increase of 0.3%), which slowed down compared with the monthly increase of 0.5% in March.
Personal disposable DPI increased by 40.2 billion (a monthly increase of 0.2%), which was also 0.5% in March, so it slowed down.
Personal consumption expenditure was 39.1 billion US dollars (a monthly rate of 0.2%), which was a significant decrease compared with the increase of 0.7% in March.
However, the PCE price index rose by 0.3%, the core PCE rose by 0.2%, and the actual DPI in April fell by 0.1%, goods fell by 0.4%, and services rose by 0.1%.
It is important to explain here that the PCE data includes the current price PCE index and the actual PCE index. The current price PCE is calculated based on the monthly price fluctuations of various values, and the calculation is also based on the current data after the change to compare the DPI to make the result. The actual PCE is compared under the assumption that the data price remains unchanged.
Simply put, the current price PCE is the current value that takes into account all variables, which is large and unstable. The actual PCE truly reflects the consumption level of residents and the strength of the economy under a fixed value.
In the current price PCE index in April, personal expenditures were 39.1 billion, and services included 49.1 billion. The largest contribution to this data is housing and public utilities, especially housing, and also includes health care and financial services (insurance, fees, commissions), but the decline in shipping and transportation offset some of the growth.
And commodity expenditures decreased by 10 billion, of which entertainment products and vehicles contributed the most.
Comprehensively, personal expenditures in April were 39.1 billion, 49.1 billion service growth minus 10 billion commodity declines.
The above current price PCE index includes the price changes of goods and services, among which the main price changes in April were:
The PCE index in April increased by 0.3%, of which commodity prices rose by 0.2%, services rose by 0.3, food fell by 0.2%, and energy prices rose by 1.2%. The core PCE index rose by 0.2% (excluding energy and food)
Through the price changes in April and the data changes of current PCE, we can see that under the premise of rising commodity prices, spending in April still decreased by 10 billion, indicating that residents' willingness to consume has declined, which is one of the manifestations of concerns about future income.As for services, prices have risen, and residents' reliance on the service industry has led to high service industry data.
Compared with the same period last year, that is, compared with April 2023, the PCE index increased by 2.7%, prices rose by 0.1, services rose by 3.9%, food prices rose by 1.3%, and energy rose by 3.0%. The core PCE index increased by 2.8%.
Although the data is the same as the same period last year, this is under the premise of rising commodity and service prices, especially under the substantial growth of the service industry, which overall shows that residents' willingness to consume has begun to decline.
The actual PCE in April is a comparison of residents' consumption data under the premise that the prices of commodities and services remain unchanged.
The actual PCE fell by 0.1%, reflecting a 0.4% decline in commodity consumption and a 0.1% increase in services. Among them, gasoline and other energy (mainly gasoline, lubricants and other liquids), entertainment products and vehicles and other non-durables contributed the most to the decline in the index.
Among them, the largest contribution to service growth is health care (mainly outpatient services).
Summary:
From the PCE data in April, considering the price change of goods and services, the inflation pressure in the United States is still obvious, because as personal expenditure growth decreases, the price of goods and services rises, and demand has not decreased significantly. The biggest pressure on the data is still services, which can even be specific to rent.
In contrast, if the actual PCE data is not considered, the overall data is going down, but the pressure of the actual PCE data is also on services. The service pressure this month is mainly from the medical aspect. (Whoever says that the United States provides free medical care at any time, Muyang Dog will be pulled out and his legs broken)
Continued:
After interpreting the PCE data, the conclusion is that the overall inflation in the United States is still under a lot of pressure, but in the short term, the inflation control work under regulation is effective, at least personal income is decreasing.
Isn't this what Powell wants to say?
In fact, the core PCE monthly rate in this period can be seen as the result of adjusting market expectations. The original monthly rate expectation was 0.2%, but it became 0.3% this week. According to the current published results, the change in expected results will bring different results to the market.If PCE continues to play like this, then the credibility of PCE will gradually decline, and everyone may only be able to rely on guesswork.
