One of The Fed's favorite inflation indicators - Core&nbsp;PCE Deflator - rose 4.6% YoY (slightly cooler than the 4.7% exp but still 'stuck' at very high levels). Headline PCE fell back below 4.00% (3.8%) for the first time since April 2021...

Even more focused, is the Fed's view on Services inflation ex-Shelter, and the PCE-equivalent shows that is very much stuck at high levels...

Personal Income and Spending were both expected to rise on a MoM basis and did but while incomes rose more than expected, spending rose less (+0.4% vs +0.3% exp and +0.1% vs +0.2% exp respectively)...

YoY Spending growth slowed while YoY Income growth was flat in May

Adjusted for inflation, 'real' personal spending was unmchanged in May (up 2.1% YoY)...

More problematically, wage growth is re-accelerating...

Putting all that together, we see that the savings rate increased to 4.6% from 4.3%...

Is the consumer starting to pull back? Stalling spending combined with sticky core PCE - smells like teen-stagflation to us

Govt worker wages rise 5.5%, highest since May 2022...
{ai:summary}#economy #inflationThe Core PCE Deflator rose slightly to 4.6% YoY, while headline PCE fell back below 4.00% for the first time since April 2021. Services inflation remains at high levels. Personal income rose more than expected, but spending rose less. YoY spending growth slowed, while YoY income growth was flat. 'Real' personal spending was unchanged in May. Wage growth is re-accelerating, with private and government worker wages reaching their highest levels in several months. The savings rate increased slightly. Stalling spending and sticky core PCE indicate a potential stagflation situation.

Fed's Favorite Inflation Signal Remains 'Stuck' As Wage-Growth Re-Accelerates In May

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