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Core PCE Nudges Higher, Lowest Saving Rate Since 2008

  • Core PCE inflation slightly higher than expected in that it’s a large 0.3% at +0.34% M/M after an upward revised +0.33% in Mar (+0.04pps). It has technically accelerated for two months now but they’re all 0.3% on rounding.
  • It sees the Y/Y fall from 5.20% to 4.91% having likely peaked at 5.30% in Feb.
  • The household saving rate fell from 5.0% to 4.4% for a new low since 2008 (vs 7-7.5% pre-pandemic) on a combination of stronger than expected personal spending (+0.9% M/M from an upward revised +1.4%) and softer personal incomes (+0.4% M/M from +0.5%).
  • Meanwhile, despite stronger spending there was on balance a larger than expected rise in wholesale inventories, +2.1% M/M in April after an upward revised +2.7% M/M.

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