PCE Index Rises 5.7% Under Fed's Watch

Core PCE rises 4.7% to highest level since 1982
Personal consumption expenditures growth slows
New unemployment claims unchanged from previous week

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The Personal Consumption Expenditures (PCE) index, a key inflation indicator emphasized by the U.S. Federal Reserve (Fed), surged by 5.7% in November. However, the slowdown in personal spending growth has raised concerns about the future economic outlook.

The U.S. Department of Labor announced on the 23rd (local time) that the November PCE rose 5.7% compared to the same period last year. The October increase was 5.1%.

The monthly increase was 0.6%, slightly lower than October's 0.7%.

The core PCE, which excludes volatile sectors such as fuel and food, rose 4.7%. This is the highest increase since 1982 and exceeds the market expectation of 4.5%. The October increase was 4.2%.

The monthly core PCE increase was 0.5%, the same as the previous month.

The Consumer Price Index (CPI), released prior to the PCE, also surged by 6.8%, warning of the severity of inflation in the U.S.

The sharp rise in inflation increases the likelihood of an early interest rate hike by the Fed.

According to the Department of Commerce, the growth in personal spending has somewhat slowed. Personal spending, which increased by 1.4% in October, rose by only 0.6% in November. The October personal spending growth rate was revised upward from 1.3%.

The Wall Street Journal interpreted the slowdown in personal spending growth as many consumers starting their year-end shopping in October rather than November due to supply chain disruptions. It also analyzed that the sharp rise in inflation has significantly influenced consumers to reduce spending.

Income increased by 0.4%, a lower growth rate compared to 0.5% in the previous month.

Aneta Markowska, an analyst at Jefferies, said, "Fourth-quarter consumption is very strong, but momentum is gradually fading."

Durable goods orders increased by 2.5%. This is a significant rise compared to the expected 1.6% and the previous month's 0.1% increase, attributed to a large increase in appliance orders during the year-end shopping season.

Durable goods orders excluding defense also rose 2.0%, a larger increase compared to the previous month's 1.3% rise.

Weekly initial jobless claims remained unchanged at 205,000 from the previous week.

This content was produced with the assistance of AI translation services.