Consumers slow spending while inflation rises, Diane Swonk notes

Consumers slow spending while inflation rises, Diane Swonk notes
Inflation accelerates as spending slows

Diane Swonk notes that recent economic data show underlying inflation continuing to accelerate, even as consumers appear to be cutting back on spending. Swonk highlights the persistence of buoyant inflation, which has intensified following the onset of the war. The data covers a range of indicators including PCE, GDP, income, and sentiment, reflecting ongoing economic challenges.

The persistent strength in inflation, despite consumer restraint, recalls Swonk’s examination of the surge in the core goods producer price index and the resulting record profit margins seen since early 2022. These developments further underscore concerns raised in her analysis of Fed official Waller’s views on inflation accountability and the pivotal role of the PCE index in policy decisions.

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