IND - PCE February 2024: Personal Spending Too Hot For Fed Rate Cuts

2024-03-29 12:04:42 ET

Summary

• Real PCE (adjusted for inflation) in February 2024 expanded by 0.43%, significantly surpassing economists' expectations of 0.10% growth.
• The February real personal spending figure swings the 3-month rate of personal spending growth from well below average to above average.
• The current pace of growth of personal spending, and overall economic activity, is too hot under current conditions characterized by supply-side constraints.
• The strong personal spending growth supports the Fed delaying interest rate cuts.

The Bureau of Economic Analysis (BEA), has just released its estimate for February 2024 US Personal Consumption Expenditures (PCE). Also known as “Personal Spending,” PCE directly accounts for over 60% of total US Gross Domestic Product (GDP), marking it a crucial indicator for assessing changing rates of expansion, contraction, and momentum in US economic activity.

According to the BEA, Real PCE (adjusted for inflation) expanded by 0.43% — an upside surprise compared to the median forecast of professional economists which expected 0.33% growth....

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