PCE Report: Fed's Preferred Inflation Gauge Rises 2.8% In February, But US Growth Slows Sharply To 0.5%

• Consumer spending, adjusted for inflation, increased 0.1% in February after stagnating in January, outpacing the 0.1% decrease in personal income during the month.
• In absolute terms, personal income decreased $18.2 billion in February, while disposable personal income fell $18.3 billion.
• Personal consumption expenditures increased $103.2 billion, while personal outlays increased $106.5 billion during the month.

The Personal Consumption Expenditures (PCE) Index, which is the Federal Reserve’s preferred gauge of inflation, advanced 2.8% in February on an annualized basis.

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

Both PCE and core PCE were in line with analyst forecasts, according to a Dow Jones estimate as cited by MarketWatch. This is the final PCE print before the Iran war began, following attacks by the U.S. and Israel on February 28.

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

Q4 GDP Revised Down

The gross domestic product (GDP) for the fourth quarter (Q4) was revised downward, reflecting a downturn in government spending and exports.

The Bureau of Economic Analysis reported that the U.S. economy grew at an annualized rate of 0.5% in Q4, lower than the Dow Jones forecast of 0.7%, as cited by MarketWatch.

Consumer Spending Inches Up

Consumer spending, adjusted for inflation, increased 0.1% in February after stagnating in January, outpacing the 0.1% decrease in personal income during the month.

In absolute terms, personal income decreased $18.2 billion in February, while disposable personal income fell $18.3 billion. Personal consumption expenditures increased $103.2 billion, while personal outlays increased $106.5 billion during the month.

Personal savings stood at $931.5 billion in February, while the personal saving rate was 4%.

Jobless Claims Rise

Meanwhile, jobless claims rose in the week ended April 4 to 219,000 from 203,000 in the prior week, higher than a Dow Jones estimate of 210,000, as cited by MarketWatch.

The four-week moving average for jobless claims, which smooths weekly volatility, rose by 1,500 to 209,500.

Continuing claims, which refer to the number of people claiming unemployment benefits beyond the first week, hovered in the 1.79 million range for the week ending March 28, decreasing by 38,000 over the previous week.

Meanwhile, U.S. equities declined in Thursday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, fell 0.27%; the Invesco QQQ Trust ETF (QQQ) declined 0.2%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 0.39%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘extremely bearish’ territory.

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

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