Exploring Economic Indicators: PCE Price Index, GDP, and Consumer Confidence

Economic indicators are released every week to provide insight into the overall health and performance of an economy. They serve as essential tools for policymakers, advisors, investors, and businesses. That's because they allow them to make informed decisions regarding business strategies and financial markets. In the week ending June 27, the SPDR S&P 500 ETF Trust (SPY) rose 0.22%. The Invesco S&P 500 Equal Weight ETF (RSP) was down 0.32%.

This article examines three important economic releases from the past week. Those are the personal consumption expenditures (PCE) price index, Q1 gross domestic product (GDP), and June’s consumer confidence index. These provide insights into the country’s economic landscape, with a particular focus on consumption and consumer attitudes. By understanding consumers' attitudes toward the economy, we can gauge their spending patterns. That significantly impacts overall economic growth.

Personal Consumption Expenditures (PCE)

The Fed’s preferred inflation gauge rose at its slowest monthly rate in the past six months in May. The Core PCE Price Index measures inflation excluding volatile food and energy prices. It rose by 2.6% compared to the previous year, down from 2.8% in April. This is the first deceleration in core PCE since February. It remains at its lowest level since March 2021. Additionally, headline PCE also decelerated in May, slowing to 2.6%, as expected. On a monthly basis, headline PCE was flat while core PCE inched up by 0.1% from April. Both monthly increases are the smallest monthly change for each series since November of last year. The latest PCE numbers came in as expected. But they should provide some relief that inflation is cooling and making progress toward the Fed’s 2% target.

PCE Price Index YoY