Here’s a quick look at the most significant economic indicators of the day and what they tell us.
PCE Inflation
The Federal Reserve’s preferred measure of inflation showed it continued to accelerate in February, not unlike the other popular measure of inflation, the Consumer Price Index. Prices rose 6.4% in the year through February, faster than the 6.0% rate in the year through January and the fastest 12-month jump in 40 years, the Bureau of Economic Analysis said in releasing its report on personal consumption expenditures, sometimes referred to as PCE. An increase of 0.6% during the month was higher than January’s 0.5%, though “core” prices—which exclude food and energy prices—decelerated slightly, rising 0.4% in February compared to 0.5% in January. The report makes it more likely the Fed will increase its benchmark interest rate even more than anticipated, perhaps 0.5 percentage point at its next meeting in May, in an attempt to cool inflation, economists said.
Personal Income and Spending
Inflation diminished shoppers’ buying power and forced them to cut back their purchases even as they brought home more in wages, data from the Bureau of Economic Analysis showed. Inflation-adjusted consumer spending fell 0.4% in February even though the total dollars spent rose slightly, showing people’s money didn’t go as far because of those price increases. Disposable income similarly rose in dollar terms—thanks to rising wages from workers being in high demand—but fell 0.2% once inflation was taken into account.
Initial Unemployment Claims
The number of initial jobless claims last week (people filing to get unemployment benefits for the first time) stayed comfortably within the range typical before the COVID-19 pandemic began, despite a slight uptick from the previous week. There were 202,000 claims, 14,000 more than the previous week, the Department of Labor reported. The data shows companies aren’t laying off workers, but actually have the opposite problem—more job openings than people to fill them, economists said. The weekly numbers took a year and a half to return to pre-pandemic levels but have largely stayed in that range since December. (One exception was a few weeks in January, when a surge in virus cases could be felt in the economy.) For perspective, claims were in the millions in the early months of the pandemic—over 6 million one week—when businesses scaled back or shut down.
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