Ernie Tedeschi: Software and accessories inflation in PCE is highest since late 1970s

Ernie Tedeschi: Software and accessories inflation in PCE is highest since late 1970s
Software inflation in PCE hits 1970s peak

Ernie Tedeschi highlights that software and accessories inflation within the personal consumption expenditures (PCE) index, categorized under durable goods, has reached its highest level since the series began in the late 1970s.

Tedeschi suggests that increased demand for artificial intelligence could be contributing to higher measured core PCE inflation in this segment.

Tedeschi has previously examined AI-related capital expenditures, noting that imported equipment may limit direct gains to U.S. GDP in his analysis of AI capex impacts. He has also discussed how slower growth in AI capital spending could reduce U.S. GDP growth rates from 2% to about 1.5-1.75%, according to a recent commentary. These observations come as AI demand continues to influence inflation readings in various sectors.

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