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Market Wire: US Consumer Spending and Inflation Measures Decelerate On Dropping Gas Prices, Dollar Ticks Lower

CalendarAugust 26, 2022
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American households slowed spending last month as falling gasoline prices helped offset an increase in services outlays - and the Federal Reserve’s preferred inflation measure rose by less than expected. Data released by the Bureau of Economic Analysis this morning showed inflation-adjusted household outlays climbing 0.2 percent in July - roughly corresponding with a previously-reported flatlining in retail sales. A $33.3 billion increase in spending on services was partly offset by a $9.6 billion drop in spending on goods, with energy costs dragging the number down. 

In unadjusted terms, personal income rose 0.2 percent month-over-month, led by a solid 0.8 percent increase in private-sector wages and salaries. 

The core personal consumption expenditures index - the Federal Reserve’s preferred inflation measure - rose 0.1 percent from June, up 4.6 percent year over year -  softer than consensus estimates which were set at 0.2 percent and 4.7 percent, respectively. 

Yields dropped after the release, and the greenback slipped as the case for a 75 basis-point move at the Federal Reserve’s September meeting grew weaker - but this response could fade quickly, with Chair Jerome Powell set to address the world from Jackson Hole in less than an hour and a half. 

Author

Karl Schamotta

Karl Schamotta

Chief Market Strategist

Karl leads Corpay’s currency research group, focused on analyzing shifts in the world economy and creating strategies that help businesses harness market volatility.

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