It’s The Economy That Matters: PCE, GDP, Durable Goods & Employment Numbers

Several key economic indicators come out every week to help provide insight into the overall health of the U.S. economy. Policymakers and advisors closely monitor these indicators to understand the direction of interest rates, as the data can significantly impact business decisions and financial markets.

In this article, we take a deeper look at three of the most important economic releases from the past week: personal consumption expenditures (PCE), gross domestic product (GDP), and new orders for durable goods. By examining these data points, we gain valuable insights into the spending behaviors of consumers and businesses and how these patterns impact overall economic growth.

In the week ending on May 25, the SPDR S&P 500 ETF Trust (SPY) fell 1.09%, while the Invesco S&P 500® Equal Weight ETF (RSP) was down 2.32%.

Personal Consumption Expenditures (PCE)

The PCE price index revealed that inflation is sticking around. On an annual basis, consumer spending rose 4.4% in April compared to a year ago, up from 4.2% last month. This month’s reading went against expectations that inflation would continue to drop, marking the first increase since January.

Core PCE, better known as the Fed’s preferred measure of inflation, also came in higher than expected in April. The latest data showed an annual increase of 4.7%, which was just above the 4.6% forecast. Like the headline data, this marked the first uptick since January. On a monthly basis, both the headline and core PCE price index increased 0.4% from March.

While the headline number was in line with expectations, the core number was higher than anticipated. The PCE price index remains well above the Fed’s 2% target rate and this month’s unexpected increase could deter past hopes of rate hikes ending soon.

PCE Price Index