Fed's inflation gauge in May

The PCE-based Ecumenical Underlying Inflation measure was 2.6% in May, much higher than the CPI based one. Pretty much all the measures agree--the last three months have been very tame but everything before that was not. pic.x.com/SGeZC7Mwok

A combination of weaker activity and stubborn inflation is the message from today's US data so far. Monthly growth for both personal income and spending was negative in May, and below the consensus forecasts. Core inflation was slightly above the consensus forecasts for both the

The Cleveland Fed's calculation of the median PCE inflation rate for May was +0.22%, which annualizes to 2.6%. This was the lowest since July 2024. The 12-month reading was 3%, little changed from recent months. pic.x.com/xymIsvPuS9

These two charts illustrate the key tension that tariffs will create more inflation risk alongside greater downside risk to consumer spending (which is the engine for the U.S. economy). If you are worried more about inflation, you would look at the rise in durable goods prices pic.x.com/2kwh2zMv2K