One of The Fed's favorite inflation indicators - Core PCE Deflator - rose 4.2% YoY in July (as expected but higher than June's +4.1%). Headline PCE jumped up to +3.3% YoY (also as expected) - the biggest jump in YoY prints since June 2022...
Source: Bloomberg
Even more focused, is the Fed's view on Services inflation ex-Shelter, and the PCE-equivalent shows that is very much stuck at high levels...
Source: Bloomberg
Services inflation accelerated in July but Goods saw the biggest MoM deflation since 2022...
Source: Bloomberg
Personal Income growth slowed for the 2nd month in a row as Spending accelerated for the 2nd month in a row...
Source: Bloomberg
On a year-over-year basis, spending accelerated as income growth decelerated...
Source: Bloomberg
Wage growth slowed:
Private workers wages and salaries 4.6%, down from 5.9%
Govt workers wages and salaries 6.0%, down from 6.1%
Adjusted for inflation, 'real' personal spending was higher in July (up 3.0% YoY)...
Source: Bloomberg
But real disposable income fell 0.2% MoM - its biggest decline since June 2022...
Putting all that together, we see that the savings rate plunged to 3.5% - the lowest since Oct 2022 - down from 4.3% - the biggest drop since Jan 2022....
It appears the American consumer is completely tapped out - consumer credit has flatlined (maxx'd out) and now savings are plunging again.
