PCE Report: Fed's Preferred Inflation Gauge Rises 2.9% In December

• Consumer spending, adjusted for inflation, increased 0.1% in December, compared with the 0.3% increase in personal income.
• In absolute terms, personal income increased $86.2 billion in December, while disposable personal income rose $75.7 billion.
• Personal consumption expenditures increased $91 billion, while personal outlays increased $90.2 billion during the month.

The Personal Consumption Expenditures (PCE) Index, which is the Federal Reserve’s preferred gauge of inflation, advanced 2.9% in December on an annualized basis.

The Commerce Department data showed that core PCE, which excludes food and energy, rose 3% on an annualized basis in December, up 0.4% on a monthly basis.

While PCE was in line with analyst forecasts, core PCE was higher than expectations, according to a Dow Jones estimate as cited by MarketWatch.

Source: Bureau of Economic Analysis, U.S. Department of Commerce

Consumer Spending Increase Matches Personal Income Gains

Consumer spending, adjusted for inflation, increased 0.1% in December, compared with the 0.3% increase in personal income.

In absolute terms, personal income increased $86.2 billion in December, while disposable personal income rose $75.7 billion. Personal consumption expenditures increased $91 billion, while personal outlays increased $90.2 billion during the month.

Personal savings stood at $830.8 billion in December, while the personal saving rate was 3.6%.

Jobless Claims Decline

Meanwhile, jobless claims fell in the week ended February 7, registering the biggest drop in more than two months.

Jobless claims fell by 23,000 from the prior week to 206,000, lower than a Dow Jones estimate of 223,000, as cited by MarketWatch.

The four-week moving average for jobless claims, which smooths weekly volatility, fell by 1,000 to 219,000. The previous week’s average was revised upward by 500 to 220,000.

Continuing claims, which refer to the number of people claiming unemployment benefits beyond the first week, hovered in the 1.87 million range for the week ended February 7, increasing by 17,000 over the previous week.

Meanwhile, U.S. equities were mixed in Friday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.03%, the Invesco QQQ Trust ETF (QQQ) rose 0.22%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.36%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.01% at the time of writing.

Also See: US GDP Grows At 1.4% In Q4, Economy Expands At A Slower Clip Than Wall Street Estimates

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