Inflation Watch! July PCE Deflator Rises To 4.2% YoY (Home Prices Growing At 16.6% While M2 Money Growing At “Only” 12.1%)

Fed’s Favorite Inflation Measure Surges At Fastest Pace In 30 Years As Spending, Incomes Rise!

Federal Reserve Chairman Mao Powell will be speaking at 10am EST in his virtual Jackson Hole KC Fed Conference speech. He might actually save his blockbuster comments for the next Fed meeting, instead just hinting at what The Fed might do to reduce the behemoth monetary stimulus. After all, The Fed has already slowed the growth rate of M2 Money to 12.1% YoY.

But before Chairman Mao Powell speaks, the PCE deflator numbers were released this AM showing that the PCE Deflator YoY rose to 4.2%. For households for a fixed income, this is bad news unless they receive a COLA (not a Pepsi, but a cost-of-living adjustment).

I would be remiss if I left out the largest assets for most households: housing. The Case-Shiller National Home Price Index is rising at a 16.6% YoY pace, making housing more expensive for those who are currently renting.

Speaking of which, the US Supreme Court overturned the Biden Administrations rent moratorium meaning that renters can be evicted for failure to make rent payments. (This sounds cut and dry, but the ability of landlords to evict non-paying rents varies from state-to-state and county-to-county).

Having said that, we can see that Personal Spending only grew by 0.3% in July while REAL personal spending fell by -0.1%.

Personal income grew by 1.1% in July and 2.7% YoY , which is lower than the PCE Deflator YoY of 4.2%.

University of Michigan sentiment is out at 10AM EST. Stay tuned!

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