Core PCE is up 2.8 percent from a year ago, no change in 8 months.
PCE Inflation Detail Year-Over-Year
Chart Notes
- PCE stands for Personal Consumption Expenditures. In this case, we are discussing the PCE price index.
- PCE is in an uptrend since bottoming at 2.10 percent in September of 2024.
- PCE goods bottomed at -1.2 percent in September of 2024. It’s been in a wild tariff ride since. Expect up from here.
- PCE services has seen mild improvement since September of 2024 falling from 3.68 percent to 3.49, hardly the improvement the Fed wants.
- Core PCE has been flat for 8 months but is up from 2.66 percent in September of 2024 to 2.79 percent in June.
Five Measures of Inflation Percent Change Year-Over-Year
The only clear downtrend in the above chart is the BLS CPI measure of rent.
It’s possible, if not likely, the other chart items started uptrends in April of 2025.
PCE Inflation Detail Month-Over-Month
Month-Over-Month PCE Details
- PCE: 0.3 percent
- PCE Goods: 0.4 percent
- Core PCE: 0.3 percent
- PCE Services: 0.2 percent
The number to beat for July is 0.17 for both the PCE and Core PCE. Readings above 0.17 percent will result in an increase in the year-over-year numbers.
It was on this basis, and medical care costs, I expected a rise in year-over-year PCE numbers today.
There is not an easy-to- beat set of numbers until January 2026. The numbers to beat In January will be 0.38 on the PCE and 0.34 on the core PCE.
I expect to see year-over-year core PCE back above 3.0 percent before January unless all hell breaks loose economically.
Nothing Above Suggests Rate Cuts
If you think the above PCE and CPI data merits a rate cut, you are highly likely influenced by Trump or some other bias.
What If?
All hell could break loose, and by that I mean collapsing demand and job losses coupled with price declines.
But that’s betting on a trifecta.
There are other scenarios including a nasty wave of stagflation. In the stagflation light scenario, prices increase due to tariffs and jobs weaken but not collapse.
More concerning to the Fed would be huge price hikes due to tariffs and significant labor market weakening.
All of these scenarios, and everything in between, are why the Fed is on hold.
Labor Markets
I believe the labor market is weaker than the Fed thinks. I am sure of it.
Yet, the economy has been much more resilient than I expected. That’s something Powell mentioned a well.
I am no Fed apologist, and there should not be a Fed at all. However, one thing worse than a Fed would be a Fed controlled by politicians.
Related Posts
July 31, 2025: Real Disposable Personal Income Flat in June, Inflation Eats All Wage Gains
DPI rose 0.3 percent but so did the PCE price index.
July 31, 2025: Another Weak ADP Payroll Report, Especially Small Businesses
ADP reported a gain of 104,000 private payrolls. Small businesses weak again.
Be prepared for anything.
So the jobs report shows a weak labor market but still PCE is stuck between 2.5 and 3%.
At the current rate, maybe unemployment needs to increase to at least 6% to maintain PCE or annual inflation between 2.5% and 3%.
Reads like stagflation conditions :-/
Zero Hedge is on fire with the typical Friday news day articles and comments today.
Plus TARIFF DAY!
Kind of sad to start the morning there, after rereading the ever observant and timely 20 year old daily Boondocks comic, then move from site to site down the controversy ladder
Bottom line Trump feels empowered because the stock market has not crashed, bond market is ok and dollar slightly down. His base is angry but still with him. Dangerous times unless something breaks. But as you said this is a resilient economy.
No Trump feels nothing. He plays the WWE game and does not truly care because he has two years and his family is making big profits.
He gets to piss away his time golfing and NOT having sex with his VERY angry looking wife.
The Proles, genpop and Morlocks are the only ones that care.
Even then they are distracted by TikTok.
It happened before. Was it not LBJ who man-handled his FED back then?
Except, he didn’t succeed. Martin raised rates and became the longest serving Fed chair. Nixon also tried to strong-arm Martin and he also failed. Martin also failed. Inflation continued its steady climb and then everybody blamed Carter.
Martin eventually caved in too. He started targeting the Fed Funds rate.
the art of the deal with Japan–let’s pretend
Tokyo insists that it made a very different deal than the one Trump crowed about. And, since there is no joint statement—and no intention to compose a legally binding agreement—no one really knows what words each side used. For example, Japan says it never promised $550 billion in new investments. All it offered was to make government loans and credit guarantees up to that level to help companies that desire to invest more in the US. However, it has no power to force private companies to make investments that they don’t need. Nor has it given Trump the power to direct the investments. As for profit-share, Japanese government funds will finance only 1-2% of the future deals via equity investments (the rest being loans) and profits will only come from that 1-2%; the American profits share will not be 90%, but will be “based on the degree of contribution and risk taken by each party.” One hunrded Boeing jets is just the number of jets that Japanese airlines said they are already planning to buy over several years; there is no increase in the number.
Who knows what happened. Did Trump say 90% of the profits and Akazawa simply fail to contradict him, or did Trump make it up after the event?
In fact, Akazawa more or less admitted at a press conference that Japan does not want a written agreement because the absence of one enables Japan to avoid meeting the terms that Trump claimed. As long as Japan can get Trump to lower America’s import tariffs to 15%—and it wants this done by tomorrow (August 1st)—“strategic ambiguity” is Japan’s friend. It can evade the promises Trump may think Japan made—or that Trump is just making up now—all the while insisting that Japan is fulfilling its part of the bargain. In a TV interview, Akazawa argued that, if a written bilateral agreement were to be drawn up, Trump and his team would want to pin down details, and that would increase the chances of him changing the deal to make it more onerous. In commenting on this interview, Nikkei wrote, “What Japan gets from the deal is definite, and what Japan is offering is being left vague, said a Japanese government source…. Crafting a written agreement may not be in Japan’s best interest. Creating a written agreement could force Tokyo to agree to the US’s terms.”
https://richardkatz.substack.com/p/tokyo-says-if-we-dont-put-anything
Why wall street whales sent MSFT and NVDA to the $4T zone, while the donkeys in the caravan are walking slowly behind. Something isn’t working right.
I am gushing profits on NVDA. Told you guys I bought it at $105 a few months ago. I’ll probably get out soon though.
I clicked AMD @96.2
Yep, gonna drop like a stone from a plane very soon.
China is complaining about their chips.
Data centers are still in the planning stage but every free AI undercuts Nvidia.
I’ve read a lot of articles from various sources regarding Nvidia and associated business that seem to prop them up. But those businesses are being devalued then slip back up. Odd that almost as if someone wants to avoid a market crash.
Then again with breakers and PPT it will never truly crash.
no bragging about stock picks please.
Tariffs + inflation = the new regressive tax hikes.
MSFT and NVDA bs are over $4T, but ES and NQ are down.
The optimal age for retirement is 65. Over 4 million boomers will turn 65 in 2025.
In order to cover SS the gov cut SNAP. Less money to spend. Many boomers will collect SS, SNAP and cont to work. The CPI-W in July, Aug and Sept calculate COLA. The Dow (DIA) is doing nothing since Nov 2024. July bar is the smallest since June 2024, on higher vol. If the Dow drops COLA will be low. If the Dow snaps JP will cut rates. Every month more illegal in the non farm payroll pay SS and payroll taxes. They compete with the poor. They cannibalize them. Many help farms. The holistic PCE picture : lower PCE rent, lower PCE service and lower PCE core will counter higher PCE goods.
I will pay good money to watch boomers work on farms picking crops. I am dead serious.
I will pay better money for Blue haired Karens to pudding wrestle on those same farms. Two on my street one put up the Blue cop pride flag and here Antifa biased neighbor posted on local soc media how she had to run out and buy a bunch of tiny pride flags for around her house. Should have purchased some protein bars for the local homeless digging in the public housing dumpster every day.
Or the various recent gens, what happened to gen y? HK had a gen y cops moxie out a while ago.
Core goods inflation will feed services inflation, just with a lag. The hairdresser needs to pay for hair products like shampoo and conditioner; the landscaper has to pay for new tools and equipment. They might eat it for a month or two, but then they have no choice but to raise prices or go out of business.
Gardeners will pay more for tool, less for illegal immigrants and less for oil.
“Less for illegal immigrants?” Try finding someone to cut your grass … American’s won’t do it, not for the cheap rates we used to get … your comment there makes no sense.
Oil might go up, or down, or stay flat … depends on geopolitical risks, and whether TACO’s foolish secondary sanctions on China/India have any teeth
Dude recently some dude and his gf stole a mower and offered to cut my grass.
Pretty funny really.
President Donald Trump on Wednesday signed an executive order ending the de minimis trade loophole for low-value packages shipped from all countries.
The order, which takes effect Aug. 29, will subject any shipments of imported goods into the U.S. worth $800 or less to duties, the White House said.
The oil drilling rig count fell for the 13th week in a row as oil prices have risen back to the $70bbl mark. So much for Trumps promise to “Drill Baby Drill”. Like almost all of his bullshit promises.. Gas has risen $.40 cents since the day of the election in my market.
Canadian week at our local resort has been cancelled because the Canadians refuse to come into our country. This used to be a major event with hundreds of golfers migrating to our town and spending their hard earned dollars. No more! They hate us thanks to Trump.
Our perverted, pussy grabbing president has his right wing congress sheltering him from his role with Epstein. Collusion is what it appears to be.
It seems that the only thing we can expect from Trump is more lies and abuse of his diminishing power.
Even MAGA is starting to hate on him for his crimes against underage girls.
I do not feel like it, but you COULD summarize all of your issues with Trump and then substitute: “Resume’s of Politicians.”
Expect NO more from the rest of them.
When will trump wipe the egg off his face for his ill-fated tariffs keeping the fed on hold. Score one for Powell.
2026 when he leaves office one way or another. The “poor veinous circulation” thing maybe lays the ground work for health problems. Then again he is 80.
Vance/MTG ticket, probably pull her when Trump ” retires”.
Both have been laying the foundations for the long game, enough moderation and playing to MAGA plus religion.
Everything BIGOV and BIGBUS does for the last 25 years has been smoke and mirrors.
But people react to the ” daily” propaganda as if it doesn’t change six months later.
I’m hoping ELE but nukes and Carrington event and supervolcanos don’t act as ELE just leaves pockets of people to do the same stupid crap.
Vance is the Manchurian Stepford candidate for libertarian tech. He is from flat Ohio but posed as a hillbilly, and was grown in a pod,moved along by Thiel (who thereby got hooks into Don Jr.). Cream for the elites, orbital platforms, gated jursidictions and libertarian high tech islands, with populist cheerleading and crumbs for the suitably subservient servant class. That could work with MTG keeping the proles in the corral. That would keep Trump’s coalition intact.
Total surveillance state meanwhile, and new asset classes, both super-valuable to the elites, and junk crypto and such for the proles, allowing ditching the debt-laden dollar (i.e, the financing and past that built the American century).
Glad you think beyond the moment and nonlinear. Stablecoin is the expected dollar replacement.
New draft rules came into effect in 1/1/25 so easier helping remove the poor and homeless youth for that rapid nuke battle.
Protestors get sent to Alligator ally and what happened to all those body bags Biden ordered?
Kind of fun to see the police state, well it has ALWAYS been a police state, finally pop the bright and shiny head into daylight.
my thesis remains: the reason unemployment hasn’t spiked invoking a recession is because we have 200k+ boomers retiring every month. There are also 4k dying every month too which also depletes the labor force. The US is in a demographic death spiral and we don’t have enough young people to fill all the roles, assuming they even wanted to work at the same productivity level as other generations. Oh and 71 million boomers are getting $130 billion/month in free SS handouts + hundreds of billions in medicare. What could go wrong?
Add to all of the above, Trump’s gestapo rounding up, locking and/or deporting hard working labor and inflation WILL spike hard when enough bleeding drains the economic body of labor. JPow ain’t dumb, he knows what’s coming soon.
If unemployment does spike, it may be because of AI eliminating a ton of roles.
I see that TACO gave Mexico another 90 day extension on tariffs….wait till that kicks in….
“It’s tariff turtles all the way down and inflation all the way up!”
“the reason unemployment hasn’t spiked invoking a recession is because we have 200k+ boomers retiring every month.”
Wait, I thought the number was about 10K with highs in the 11K’s for a good portion of 2025 which is supposed to be the peak year for boomer retirements.
It’s 10K PER DAY or roughly 300K per month that are retiring.
I should clarify that I am assuming “retirements” but I base my numbers on the monthly social security snapshot “over 65” new additions each month. From May to June there were 264k new enrollments. The prior month had a 223k from April to May. From April to June that’s 487k that presumably “retired” and started collecting social security.
https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/
There are wealthy people (like me) that retire or will retire that won’t enroll in social security for decade(s) which makes the number worse. There are also many people getting ill that drop out of the labor force also not included.
The only number that isn’t going up is new fresh labor.
“Trump’s gestapo rounding up, locking and/or deporting hard working labor”
If by “hard working labor” you mean fentanyl dealers then you would be right.
Although the shootouts and hits do steadily deplete their numbers so far there are plenty of new recruits.
“oh save us from evil fentanyl people that are putting a gun to our heads and forcing us to buy and consumer it!” oh the horror!
6900 Baby Boomer and Silent Generation deaths a day. Nearly 210,000 a month.
I am influenced by Milton Friedman and his thesis about the money supply and its influence on inflation. Suffice it say that the multiple inflation gages tell the story that inflation is sticky. Why is this so?
Tariffs provide only four months of influence.
Could it be that the FED has continued to support our economy in ways that only those who understand the arcane workings on monetary policy can detect?
The targeted federal funds rate is higher than every US Treasury yield out beyond ten years. From where I observe, the FED is not tight and must be providing liquidity that is unseen.
MISH…a Daily piece please
I’m influenced by it is all hot air until at least five centuries of proof.
“the arcane workings on monetary policy…”
What is arcane about whether you print more money or not? That’s all the Fed is about. When our corrupt ruling class needs them to print more money, they will.
On the other hand, Mohair, I tend to agree with you that money isn’t really tight.
Not the Fed, the Treasury. But really Congress.
The u stoppable and unprecedented-in-peacetime deficit spending is jet fuel for the inflationary Fire.
Velocity is a failed construct. I have written about this many times.
It might serve your readers with some ARCHIVE links?
Friedman and Schwartz forged the initial blueprint. But no one follows their findings. And first you have to define both money and velocity, which no one appears to be able to do.
Inflation has held up because the distributed lag effect of money flows, the volume and velocity of money, has turned up. It peaks in September but stays high for a couple of more months.
Economics is called the dismal science because the pundits don’t know a debit from a credit.
What a shame! Powell had achieved the elusive “soft landing” until Trump’s tariff debacle. Just when Owners’ Equivalent Rent was finally showing up in the inflation numbers after lagging the real-world disinflation that began in July 2021, goods inflation turned up due to tariffs, neutralizing the impact of falling OER inflation that was the missing piece necessary for PCE to get down to very near 2% finally.
What world do increased poverty and stupid amount of debt equal a “soft landing”?
Honestly do people actually bevel anything from BIGOV as real?
Well, Chairman Volcker slayed 10% inflation, but the cost was a rare back-to-back recession and an unemployment rate that stayed above 5% for the next five years. Powell, brought inflation down from a near 10% annualized peak to under 3% within 18 months without a recession and he kept the unemployment rate under 5%.
They keep changing the definition of RECESSION.
False
No changes
The banksters require inflation. It is how they make their money. They know by now that the depression it causes should be kept gradual for stagility.
The decades long Depression has not been gradual except for the few sitting on faker wealth.
I think the first quarter of the 21st century has been the biggest letdown ever. Sure great tech promise, but great tech surveillance guarantee.
Anyone ever watch Person of interest?
AI which turned into questioning if benevolent surveillance is actually invasive.
Aired just about the time Snowden released the everyone in the world is being spied on and no one even blinked.
The worst part is not dumbing down it is educated people rolling over and simply handing what the state wants.
If only the Stasi had this level of simpleton control.
I hope the Fed keeps interest rates where they are, so that I can finally buy a home, all cash. I’m watching condos in Berkeley. Prices are crashing, thank goodness. I’ll be patient, in case ‘all hell breaks loose.’
When all hell breaks loose is when you’ll almost assuredly get the best deal since you are going to pay cash.
Speaking of which, a home in Berzerkly must be well over a million these days. You must be sitting on an awfully large pile of cash (presumably in treasuries or something similar).
When all hell breaks loose you will have to fight for any rat carcass you can find.
Stupid hungry people with guns scare me. Stupid fake upper middle class rich scare me even more they will trade the wife and kids for a dead cat. Or think their shovel will take out someone with any sense.
Guns are stupid because you run out of ammo and are left with a chunk of metal.
Anything that strikes a pressure/paint works just as well. EDC pens are popular. But any pencil works.
First there were no FAT zombies in the Walking dead, they stayed in and lost weight while the one percent body fat people died.
Second as every single terrified crowd, The Monsters on Maple street from the Twilight zone, has shown us is people are dumb and just react like a crowd mind. About decade ago there was a paper on a large snowball fight that got out of hand.
The real problem is those who needs meds or health machines die immediately, or close to it. They ain’t robbing pharmacies for Insulin.
Someone pointed out you don’t want a bloody corpse on your door step. Blood draws bugs, look up Scaphism yes it is torture but you will get the idea. Bodies also void themselves. So blood, poop and urine. On your door step. NOPE.
Here is the tough part smart people and evil people will use children to get beyond your defenses. Vietnam and Northern Ireland anyone?
No one can trade for sex because no antibiotics.
Our best hope is an Enlightened despot rising from the ashes. Next best is hide in the woods and forage like Eull Gibbons.
When the big dark comes it will be sudden and terrible, like that film THREADS.
Good luck all.
All cash? Don’t the FEDS investigate that now?
I know they just dropped the 600 usd reporting requirement, but I thought the FBI magically appears at your door when you pull or deposit 5k cash from the bank.
Dope dealer crap.
Don’t be dense. “Pay Cash” used to mean physical money, but now it just means on-demand liquid credit as in “I don’t need a loan”
It’s a poor euphemism, but people won’t realize the real value of physical money, and physical asset records, until there’s a Carrington event.