The Line: Core PCE Rose 2.8% Over the Past Year

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Today, we have the latest on the Fed's favorite measure of inflation, and some good news on mortgage rates.

Core PCE Rose 2.8% Over the Past Year

The core personal consumption expenditures price index—aka core PCE—rose 0.3% in February and was 2.8% higher than a year ago. Both these increases matched expectations, so no surprise here. Over the past year, the annual rate of increase in core PCE has fallen from 4.8% to 2.8%. Not too shabby.

As I’ve said before, the Fed likes core PCE more than CPI because it measures both spending and prices, while CPI only looks at prices. Since the Fed’s target for annual core PCE growth is 2%, they still have a little more work to do before thinking about rate cuts. As Tom Petty said, “The waiting is the hardest part.”

Perhaps the best news in this report was the higher-than-expected 0.8% increase in personal consumption expenditures—aka consumer spending—in February. This is great news for economic growth, as consumer spending comprises 70% of GDP.

To sum up, inflation continues to move in the right direction, and somehow consumers keep finding ways to spend money. This was the biggest bit of economic news released this week, but with the March employment numbers coming out next week it will soon be forgotten.

Mortgage Rates Fall

The average 30-year conforming mortgage rate fell to 6.79% this week, their first decline in three weeks. Not much else to say about this, just wanted to give you some good news.