September 27th, 2024 - Volume 10 (2024), Missive 218 (Friday)
Prices are still volatile, just mostly downward now
Personal Income shows decreasing quality
Procession Continues for the Economy AKA PCE
Trust but verify is an axiom that really doesn’t make a whole lot of sense. Trust, by the mere definition of the word, only exists in the absence of verification. Nevertheless, when it comes to the most recent 50 basis point cut by policymakers at the the Federal Reserve, chances are many a pundit are expressing just that when it comes to the risks shifting away from prices and towards employment. That being said, today’s personal consumption expenditures price deflator will support some of that verification as the headline index increased just marginally in August, 0.1 percent in fact. While the overall headline number was rather tame, a lot of action existed just beneath the surface with goods prices tumbling by 0.2 percent (-0.2 percent durable goods and -0.1 percent nondurable goods) and service prices up 0.2 percent thanks almost entirely to that of housing prices which were up another 0.5 percent apparently. Service prices excluding the housing component were up just barely 0.1 percent. It should be noted, therefore, that price volatility is still rampant in the aggregate landscape, it just seems better because that volatility is now mostly pointing downward.
Price volatility is still a problem, it just seems like less of a problem because it is now moving downward.
Although prices continue to be erratic, that message will most likely be overlooked as the macro microscope clearly swings over to focus on the employment situation. Even though today’s data is more aligned with prices and consumption, the income data certainly holds quite a bit of information when it comes to the health of the labor market. More specifically, the share of personal income being driven by compensation fell down to
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