📊 #PCEMarketWatch – June 2025 Update
As of June 1, 2025, the U.S. Personal Consumption Expenditures (PCE) Price Index shows a mixed economic picture with inflation slightly easing but remaining a key concern for policymakers and markets.
🔹 Latest Inflation Data:
Headline PCE Inflation: +0.3% MoM in April, +2.5% YoY (down from 2.6% in December).
Core PCE Inflation: +0.3% MoM, +2.6% YoY (down from 2.8%).
Market-Based PCE: +0.3% in January, showing steady consumer inflation.
📈 Key Economic Indicators:
Personal Income: +0.9% in April – strong wage growth.
Consumer Spending: -0.2% in April – surprising decline.
Savings Rate: Up to 4.6% – consumers are saving more.
🏠 Housing & Inflation Outlook:
Shelter costs are still high, up 4% YoY.
Low affordability and locked-in mortgages limit housing mobility.
These factors challenge the Fed’s 2% inflation target.
🏦 Federal Reserve Outlook:
2025 PCE forecast: 2.7% (range: 1.3% – 4.1%).
18 of 19 FOMC members see inflation risks tilted upward.
📉 Market Impact:
Stock futures rose after PCE data.
Treasury yields declined.
Markets are pricing in 2-3 Fed rate cuts in 2025.
🔍 Bottom Line:
While inflation is cooling, sticky housing costs and strong income growth keep the Fed cautious. Eyes are now on the May PCE report to confirm trends and shape rate expectations.