CHART OF THE WEEK

 

 

This chart shows the behavior of the Fed’s primary inflation indicator since January 2006. Following the recession, the Fed announced it sought an average year-over-year inflation rate of 2% (an “inflation target”). The Fed prefers the core PCE (Personal Consumption Expenditures, which excludes volatile food and energy prices, to avoid overreacting to sudden temporary changes in inflation. The chart also shows the behavior of the relatively more volatile PCE, which includes food and energy prices.

More details on the recent behavior of the core PCE are discussed below in Top Economic Indicators Highlights.

LAST WEEK

News & Commentary Weekly Highlights:

• The Economist: How Vienna produced ideas that shaped the West (Saturday)
• Bloomberg: Larry Kudlow Would Bring Rationality to What Is Absurd (Friday)
• Wall Street Journal: U.S. Third Quarter GDP Revised Up to 3.5% Gain (Thursday)
• Bloomberg: Italy May Be Forced to Bail Out Its Third Biggest Bank (Thursday)
• Mauldin Economics: Greece’s Debt Problem Has Reached a Dangerous Point (Tuesday)

 

Top Economic Indicator Highlights:

• Personal Consumption Expenditures (PCE) Price Index (November 2016)
  • Core PCE (year-over-year inflation rate excluding food and energy)
    • November: 1.6%; October: 1.8%; September: 1.7%
• Noteworthy: The Federal Reserve’s main inflation indicator, the core PCE price index, which measures inflation excluding relatively volatile food and energy prices, slowed to a 1.6% increase in November. The Fed’s goal is to average 2%. The core PCE deflator has not exceeded 2% since April 2012. Slowing inflation makes future Fed rate hikes less likely.

 

THIS WEEK

Upcoming Economic Data and Events

• Monday
• Tuesday
  • Consumer Confidence Index (10:00am)
  • Richmond Fed Manufacturing Survey (10:00am)
  • Dallas Fed Manufacturing Survey (10:30am)
• Wednesday
  • Pending Home Sales (10:00am)
  • Dallas Fed Texas Retail Outlook Survey (10:30am)
• Thursday
  • Advance Economic Indicators (8:30am)
  • Jobless Claims (8:30am)
  • Dallas Fed Energy Survey (10:30am)
• Friday
  • Chicago Purchasing Managers Index (9:45am)