Inflation, income, & spending/CapEx spend

The July PCE price index rose by .2% both headline and core with the former one tenth above the estimate while the core rate was as anticipated. The y/o/y gains were 3.7% and 3.3% respectively, the same pace seen in June.

The August figure that will be seen in September will include the alterations being done to three categories, ‘portfolio management’, ‘computer software & accessories’, and ‘legal services’ with the net result being likely a two tenths drop from where it would have been under the old calculation method. I argue that the BLS should also be redoing their entire calculation of healthcare costs here as it mostly includes Medicare and Medicaid reimbursement rates which you can be sure notably understates the real costs. To this point, the BEA said healthcare costs were up just .2% m/o/m, after a .4% gain in June and one tenth rise in May, the biggest component of PCE.

Lower energy and food prices fell m/o/m but still up 15.3% and 2.4% y/o/y for each and we know they are about to inflect higher again. Service prices were up .3% m/o/m and 3.7% y/o/y. On the goods side, motor vehicles/parts prices rose .4% m/o/m. On the flip side, prices for furnishings and other household equipment fell .9% m/o/m. Prices were down one tenth vs June in clothing/footwear.