Personal consumption expenditure
The Bureau of Economic Analysis defines PCE (personal consumption expenditure) as the value of goods and services purchased by, or on behalf of, US residents. The Fed prefers this inflation (CPI) measure to assess price levels, as it reflects actual price increases for consumers.
Personal spending in March
PCE inflation heightens the possibility of a fourth rate hike
The continuous increase of PCE is a welcome sign for the Fed, suggesting inflation (TIP) is moving towards its 2% target. Whereas the Fed left rates unchanged at its May meeting, a post-meeting statement suggested a June hike. The statement indicated that inflation (VTIP) was approaching the Fed’s goal. With unemployment at a multi-decade low, the Fed may be comfortable with the current economic conditions and could hike rates three more times in 2018.