Stagflation? A scenario of rising prices and weak consumption keeps investors up at night. Core PCE and Personal Spending data provide an explosive end to February.
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Why these figures matter
The Federal Reserve (Fed) aims for 2% inflation – and its measure is the core Personal Consumption Expenditure (core PCE). While it is published after the Consumer Price Index (CPI) report, this seemingly lagging indicator matters – because the Fed says it does.
Core PCE is set to remain above the 2% YoY level, and any upside surprise may trigger worries of higher interest rates.
This time, Personal Spending will have its say. Similar to core PCE, it is a late look at consumption – but this time, it is of higher importance after the earlier Retail Sales report for January showed a substantial decline. Moreover, two consumer sentiment surveys declined sharply.
With end-of-month flows in the mix, volatility could explode.
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