Now it’s not just the Cleveland Fed’s NowCast that’s pointing at problems in Friday’s PCE (Personal Consumption Expenditures) index inflation report. Economists surveyed by Bloomberg project that the core PCE index–that is excluding food and fuel prices–climbed 0.4% in March from February. Year over year, the core PCE index is projected to be up 4.7% with the all-items rate up 5.1%. (For more on the Cleveland Fed’s forecast see my Saturday Night Quarterback post from March 26.)
In case you need a reminder, the Fed’s inflation goal is 2%.
Data on Friday are also expected to show that inflation-adjusted personal spending fell in February.
Digging down a level, Bloomberg projects that “Fed Chair Jerome Powell’s preferred ‘supercore’ inflation indicator–core PCE services excluding housing–likely will show the sticky component of inflation running steadily at 4%-5% over the past few months, not an encouraging sign of progress on disinflation.” The Fed has been particularly concerned in recent months by evidence that inflation in the service sector is proving extremely sticky.
