Folks, I almost spilled my coffee reading this one – inflation is still running wild in the US, with the Personal Consumption Expenditures price index rising 0.3% from July, bringing the annual rate to 3.4%, unchanged from the month before. I mean, who doesn’t love paying more for the same stuff, right? The Federal Reserve’s preferred inflation gauge is still higher than they’d like, and it’s all because of the war-driven energy shock that’s rippling through the economy. Somewhere in Atlanta, a producer thought this sounded terrifying, and now we’ve got headlines screaming about “stubbornly elevated” inflation.
The monthly increase in inflation is largely due to fuel and other energy prices shooting higher because of the war in Iran. You can’t make this stuff up – it’s like the economy is one big, messy web, and every time something happens in one part of the world, it affects us all. The core PCE price index, which excludes volatile food and energy prices, rose 0.2% from July, staying at an annual rate of 3% for a third-straight month. That’s not exactly great news, but at least it’s not getting any worse, right?
Despite all the doom and gloom, consumer spending is still going strong. Inflation-adjusted spending was up 0.6% in August, the strongest monthly increase in more than a year. I guess that’s what happens when people are confident about their jobs and the economy – they go out and spend money. The saving rate, on the other hand, dropped to 4.1% in August, a nearly four-year low. Bless their hearts, Americans are either reducing their monthly savings rate or relying more on credit to keep up with the rising costs.
Kathy Bostjancic, Nationwide’s chief economist, says that households pinched by higher prices have been either reducing their monthly savings rate or relying more on credit. She also notes that the strength of the US labor market has helped to fuel spending. It’s like a big game of economic Jenga – everything is connected, and when one thing changes, it affects everything else. Employment growth has accelerated and broadened out, keeping the unemployment rate low, which is great news for everyone.
The latest monthly jobs report is due out soon, and economists are expecting the US economy to have added 94,000 jobs in September, with a jobless rate staying low at 4.1%. That’s all well and good, but I’m still waiting to see how all this plays out. The August PCE report was expected to show some cooling in inflation because of some methodological changes the Commerce Department made to several key categories. Every year, the Bureau of Economic Analysis updates its massive repository of national, industry, and regional data to incorporate newly available statistics and more accurately capture changes in prices.
Economists estimated that the changes could lower the annual PCE inflation rate by a couple of percentage points. The latest report showed that July’s annual rate previously reported at 3.7% was revised down to 3.4%. The core index showed a similar reduction from 3.3% to 3%. It’s all a bit confusing, but the bottom line is that inflation is still a problem, and we’ll just have to wait and see how it all plays out.
The PCE price index is part of the Commerce Department’s monthly Personal Income and Outlays report, which includes comprehensive data on how Americans earn, spend, and save. Personal income growth and disposable (after-tax) income growth both slowed a tenth of a percentage point in August to 0.2% and 0.3%, respectively. When adjusting for inflation, disposable personal income was flat. It’s not exactly the most exciting news, but at least we’re not seeing any huge dips or spikes.
In conclusion, inflation is still a thing, and it’s not going away anytime soon. But hey, at least we’ve gotJobs and a strong labor market to keep us going. As I always say, you can’t make this stuff up – the economy is a wild ride, and we’re all just along for the ride. And on that note, I’m going to go refill my coffee cup, because let’s face it, we’re all going to need a lot of caffeine to get through this economic rollercoaster. 😊
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
⚖️ ENTER THE LEGALIZER
Think the government has no idea what it's doing? Put your case before the Federal Case Terminal and find out.
