The core personal consumption expenditures price index—aka Core PCE—rose just 0.1% last month, its smallest monthly increase since November 2020. Over the past year, Core PCE is up 2.6%, its smallest annual increase since March 2021. Both figures were in line with the Dow Jones estimates.

So good news for inflation and mortgage rates, as Core PCE continues to move closer to the Fed’s 2% annual goal. As you may remember, this report also gives us data on income and spending, so here’s a look at that info:

• Personal income rose 0.5% in May, slightly higher than the 0.4% forecast.
• Consumer spending rose 0.2% last month, below the 0.3% expectation.

The consumer spending data is worrisome, as it comprises two-thirds of gross domestic product. Hopefully the combination of rising incomes and cooling inflation will help boost spending in the second half of 2024.

Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts.

Mortgage Rates Fell for the Third Straight Week 

The average 30-year mortgage rate fell to 6.86% this week, its lowest level since early April. This also marked the fourth consecutive week rates have fallen—boy does that feel good to say. Falling rates combined with the recent increase in inventory are music to buyer’s ears. Let’s hope the music doesn’t stop for the rest of the year.