Customers walk around the Walmart Supercenter, Thursday, Feb. 9, 2023, in North Bergen, N.J. On Friday, the Commerce Department issues its January report on consumer spending. – The Federal Reserve's preferred inflation gauge rose last month at its fastest pace since June, an alarming sign that price pressures remain entrenched in the U.S. economy and could lead the Fed to keep raising interest rates well into this year.
The report also showed that consumer spending rose 1.8% last month from December after falling the previous month. Since March of last year, the Fed has attacked inflation by raising its key interest rate eight times. Yet despite the resulting higher borrowing costs for individuals and businesses, the job market remains surprisingly robust. That is actually a worrisome sign for the Fed because strong demand for workers tends to fuel wage growth and overall inflation., and the unemployment rate fell to 3.4%, its lowest point since 1969.
Typically, the PCE index shows a lower inflation level than CPI. In part, that’s because rents, which have soared, carry twice the weight in the CPI that they do in the PCE.
Thanks to Biden and the Democrats