January Economic Snapshot: Stable PCE Inflation, Mixed Signals in Personal Income and Spending, Jobless Claims Edge Up

In January, the Personal Consumption Expenditures (PCE) inflation, which is the preferred measure of inflation by the Fed, stayed at 2.4%, just as experts predicted.

Core PCE inflation, which excludes volatile items like food and energy, also remained steady at 2.8%, matching expectations. This marks the lowest Core PCE inflation rate since April 2021.

Despite other inflation metrics like the Consumer Price Index (CPI) rising, PCE inflation is going down, which is interesting.

If the Fed manages to bring Core PCE inflation down to 2.0% by the end of this year, it would be considered a significant achievement.

In terms of personal income in the U.S. for January, there was a 1.0% increase compared to the previous month, surpassing expectations of 0.4%.

However, personal spending saw a smaller increase of 0.2%, in line with expectations but lower than the previous month’s 0.7%.

Looking at jobless claims, the number of people filing for unemployment benefits rose slightly to 215,000 from the previous 201,000, slightly higher than the estimated 210,000.

Continuing jobless claims also increased to 1,905,000 from the previous 1,862,000, surpassing the estimated 1,875,000.