Good news on inflation! The latest PCE report reveals headline inflation remained flat month-over-month while dropping to 2.3%year-over-year (down from 2.7%). Core PCE – the Fed’s favorite inflation gauge – is now at 2.6%, moving closer to their 2%target.
Meanwhile, consumer spending surged 0.7% in March, possibly as shoppers rushed to beat upcoming tariffs.
What’s the bottom line?
Shelter costs remain key to reaching the Fed’s 2% goal, making up 18% of Core PCE. While these costs have stayed stubbornly high in official data, real-time rental reports from sources like Apartment List and CoreLogic show softer trends. As PCE catches up to these real-world rental conditions, we should see inflation numbers continue to improve.
