The U.S. Federal Reserve’s favored inflation gauge, the personal consumption expenditures (PCE) price index, rose in July, indicating that inflation remains persistent. Published by the Commerce Department’s Bureau of Economic Analysis (BEA), the report showed a 0.2% increase last month compared to June and a roughly 3.7% rise from the previous year. Core PCE, which excludes food and energy, also increased by 0.2%.
The latest data keeps inflation above the U.S. central bank's 2% target. According to the report, personal saving stood at $712.0 billion in July, with the personal saving rate registering at 3.0%.
Following the report, Devere Group CEO Nigel Green shared a market note warning that the U.S. economy is showing signs of stagflation. Green noted that stalling growth combined with persistent inflation creates a difficult dilemma for the Federal Reserve, as a central bank typically cannot raise rates to fight inflation while simultaneously cutting them to support weakening growth.
Financial markets largely shrugged off the latest PCE report. Wall Street's four major indexes held steady at market open, while gold prices slid moderately to $4,626 per troy ounce and silver dropped to $68.31. Bitcoin's price also experienced a slight decline following a move above the $81,000 range earlier in the week, trading between $77,250 and $79,539 over a 24-hour intraday period and exchanging hands at $77,600.
Market participants are now closely monitoring upcoming economic catalysts, including the Jackson Hole keynote from Fed Chair Kevin Warsh, the August jobs report and payroll data, and the September Federal Open Market Committee (FOMC) meeting.
