Core PCE Cools, But Fed Still Sees Inflation Pressure
A softer monthly core PCE reading gave markets relief, but the broader U.S. data mix stayed uneasy. GDP was revised lower, durable goods were boosted by aircraft, housing weakened, and consumers leaned on inflation rather than income growth. The economy remained resilient, but not comfortably so.
The past week in U.S. economic data told a simple story with an awkward edge. Inflation cooled just enough on the monthly core measure to calm markets, but not enough to clear the Fed. Growth stayed alive, yet the quality of that growth looked less comfortable under the hood. Consumers kept spending, though real spending barely moved. Durable goods orders jumped, though aircraft did much of the lifting. Trade improved, which helped the Q2 growth picture, while housing lost more ground under the weight of higher mortgage rates. Put it together and the economy still looked resilient, but it also looked more expensive, more uneven, and more dependent on narrow supports than the headline numbers first implied.
