PCE Report Shows Significant Decline in Inflation and Consumer Spending Boost, Fueling Confidence in U.S. Equities and Precious Metals

‎U.S. Inflation Cools to Record Low, Driving Optimism for Soft Landing and Market Growth

^{Credit: Google | PCE}

The latest data from the Bureau of Economic Analysis (BEA) reveals a noteworthy cooldown in U.S. inflation, marking the slowest rise in over two years. The PCE (Personal Consumption Expenditure Price Index) report for June indicates that inflationary pressures are diminishing, with the PCE index rising by 0.2% compared to 0.3% in May. Core inflation also eased, declining to 4.1% from 4.6% in May. This development has fostered optimism for a potential soft landing in the economy, supported by an increase in consumer spending. U.S. equity markets responded positively, witnessing moderate gains in the NASDAQ composite, S&P 500, and Dow Jones industrial average. Precious metals also benefited from the upbeat sentiment, with gold futures and silver posting gains.

Get details and charts on people’s income, spending, and saving in June in our latest blog: https://t.co/0hwolwPGkQ pic.twitter.com/OhVMGg1T7o
— BEA News (@BEA_News) July 28, 2023

The Federal Reserve’s rate hike strategy appears to have achieved the desired effect, with wage growth now outpacing inflation, improving the purchasing power of Americans. This indicates a solid pace of economic expansion in the second quarter, driven by robust consumer spending and steady job market growth. As a result, investors have gained confidence, leading to positive bullish sentiment in U.S. equities and precious metals. The overall data showcases a hopeful economic outlook, with a potential soft landing on the horizon. Federal Reserve officials will closely monitor these trends to inform their future policy decisions. The continuous growth in consumer spending and economic confidence will likely support further market growth and reinforce the potential for a soft landing in the economy.

The Inflation Reduction Act invests $369 billion to take the most aggressive action ever in confronting the climate crisis and strengthening our energy security.

It's allowing us to fight environmental injustice and deliver a clean energy economy. pic.twitter.com/kMwb5P4tUX
— President Biden (@POTUS) July 29, 2023