Finally Some Good News On The Inflation Front…?

Hold onto your wallets, folks! It seems like the inflation monster has decided to take at least a brief nap. In January, the Federal Reserve's favorite inflation measure, the Personal Consumption Expenditures (PCE) price index, moved in the right direction for a change. Let's see what’s up!

Here are Five Fast Facts on the inflation cool down:

  1. 🥶 PCE Takes A Chill Pill - In January, the PCE price index rose only 0.3%, slightly lower than anticipated, marking a seven-month low. We’ll take what we can get, right?
  1. 🦥 Core PCE Inflation - The Fed’s favorite indicator of inflation hit 2.6%, its lowest mark since June of 2024. It’s still above the target of 2%, but Rome wasn’t built in a day. Hopefully a bit of time will see it creeping down some more.
  1. 😟 Patience…Or Not - The Fed admitted the situation was “not great” but emphasized this was just one month of data, and encouraged patience. At the same time, Americans were distinctly impatient with inflation not falling further, as consumer sentiment dropped to an 8-month low.
  1. 😮‍💨 Fed's Rate Cut Dilemma - The result of this regrettably sticky inflation is that we may not get as many rate cuts this year as we were hoping. About three-quarters of consumers in a recent poll are struggling to keep pace with inflation after so many years of the nasty bugger hanging around.
  1. ⛈️ Rainy Day Fund - The personal savings rate – the percentage of disposable income left over at the end of a month – was just 4.6% in January. While that’s terrible, it’s actually the highest rate since June. So…yay?

🔥Bottom line: While the inflation dragon seems to be cooling off a wee bit, the economic landscape remains as unpredictable as ever. Whether this trend continues or veers off in a strange direction is anyone's guess at this point. In the meantime, let's enjoy this brief respite and hope our wallets can finally catch a break. But do let us know if you find a sale on eggs!

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