US Core Inflation Rises In April To 4.7% Despite M2 Money Growth Crashing To -4.6% YoY, More Rate Hikes Forecast (Damn It, Janet [Yellen])

Confounded Interest ^ | 5/26/23 | staff

[CFW]

Damn it, Janet (Yellen)!

So much for Treasury Secretary Janet Yellen’s proclamtion that inflation is transitory and would subside to under 2%. April’s core inflation (PCE Deflator) rose to 4.7% YoY. Despite M2 Money growth crashing to -4.6% YoY.

Today’s Fed Funds Futures data is pointing to another rate hike or two.

With Core PCE at 4.7%, the Taylor Rule suggested Fed Funds Target rate is now 10.57%. So, The Fed is only about half way there.

[CFW]

"Personal spending in the United States jumped 0.8% mom in April of 2023, the most in three months, and well above market forecasts of a 0.4% gain, in a sign consumer spending remains robust, supported by higher wages and a tight labour market. Within services, the largest contributors to the increase were spending for financial services and insurance, health care, and professional and other services. Within goods, spending for motor vehicles and parts, led by new motor vehicles and pharmaceutical products accounted the most for the rise. Meanwhile, real PCE which is adjusted for changes in prices, went up 0.5%, reflecting an increase of 0.8% in spending on goods and a 0.3% gain in spending on services. March figures were revised higher to show a 0.1% increase instead of a flat reading initially estimated. source: U.S. Bureau of Economic Analysis"