Fed's “Favorite” Inflation Indicator Explodes At Fastest Rate Since 1992 As Incomes Crash By Record

Fed’s “Favorite” Inflation Indicator Explodes At Fastest Rate Since 1992 As Incomes Crash By Record

While Americans’ income and spending is normally the headline-making data, this morning’s release will focus all eyes on The Fed’s favorite inflation indicator – the PCE Deflator.

The headline PCE Deflator rose 3.6% YoY, the fastest rate or price increases since 2008.

Even more notably, the Core PCE Deflator soared 3.1% YoY (hotter than the +2.9% YoY expected) and the hottest print since May 1992…

Source: Bloomberg

With the highest MoM rise in the core deflator since 9/11…

Source: Bloomberg

However, back in income and spending land, the picture was very mixed with incomes crashing 13.1% MoM and spending rising just 0.5% MoM after the stimmies run dry

Source: Bloomberg

That is the biggest MoM crash in incomes ever which sent the savings rate plunging…

Source: Bloomberg

The consumer buffer is almost gone: personal savings rate plunges by 50% as Americans do what they do best: spend their savings.

So – let’s summarize – prices are rising at their fastest pace in almost 30 years and incomes just plunged by their most ever!

We’re gonna need more stimmies!

Tyler Durden
Fri, 05/28/2021 – 08:39

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