Inflation Jitters? All Eyes on PCE Next Week!

Tuesday, 25 February 2025, 17:00

US CB Consumer Confidence (Feb)

The latest U.S. CB Consumer Confidence Index (CCI) fell to 104.1 in January 2025, down from a revised 109.5 in December 2024. This decline was driven by increased concerns about labor market conditions, persistent inflationary pressures, and growing economic uncertainty. Consumers reported a weaker assessment of job availability, while inflation worries continued to weigh on sentiment despite a 0.4% rise in retail sales during the holiday season. The expectations index also dropped to 83.9, nearing a level that historically signals a recession. Looking ahead on the upcoming release, consumer confidence is anticipated to see a further slight decline.

Thursday, 27 February 2025, 15:30

US Durable Goods Orders (MoM) (Jan)

In December 2024, U.S. durable goods orders fell by 2.2% to $276.1 billion, marking the fourth decline in five months. This figure was well below market expectations of a 0.3% increase and worse than the previous month's -2.0% reading. The downturn was largely driven by a 7.4% drop in transportation equipment orders, particularly a sharp 45.7% decline in civilian aircraft orders. Excluding transportation, orders edged up by 0.3%, supported by gains in machinery, electrical equipment, and electronic products. The steep drop in transportation equipment orders was mainly attributed to a Boeing strike, which disrupted aircraft production and deliveries. Looking ahead, projections for January 2025 indicate a possible stabilization or slight recovery in durable goods orders, as labor disputes resolve and supply chain constraints ease. However, lingering economic uncertainties and potential policy shifts may continue to influence business investment decisions.

Thursday, 27 February 2025, 15:30

US GDP (QoQ) (Q4)

In the fourth quarter of 2024, the U.S. economy expanded at an annualized rate of 2.3% in the preliminary reading, a deceleration from the 3.1% growth observed in the third quarter. This slowdown was primarily attributed to a reduction in business investments, particularly in equipment, which offset robust consumer spending, which was the latter reaching its highest pace since early 2023. Additionally, inventory drawdowns contributed to the tempered growth, as businesses adjusted their stockpiles in response to shifting demand dynamics. Looking ahead, forecasts for the first quarter of 2025 suggest a continuation of modest growth. The Wall Street Journal's Economic Forecasting Survey projects a 1.7% increase in GDP for Q1 2025, while Bank of America anticipates a more optimistic 2.5% growth rate for the same period. These projections reflect a cautious outlook, balancing the momentum from consumer spending against potential headwinds from policy uncertainties and global economic conditions.

Friday, 28 January 2025, 15:30

US Core PCE Price Index (YoY) (Jan)

As of December 2024, the U.S. Core Personal Consumption Expenditures (PCE) Price Index, which excludes food and energy, increased by 2.8% year-over-year, maintaining the same rate as the previous month. This stability suggests that underlying inflation pressures remained consistent during this period. The Federal Reserve closely monitors the Core PCE Price Index as its preferred inflation gauge, aiming for a 2% target. The persistent elevation above this target indicates ongoing inflationary pressures, influenced by factors such as robust consumer demand and potential supply chain constraints. Looking ahead, forecasts for the first quarter of 2025 suggest a modest easing in core inflation. The Federal Reserve Bank of Dallas anticipates an annualized core PCE inflation rate of approximately 2.7% for Q1 2025, considering factors like labor market conditions and inflation persistence. Similarly, the Federal Reserve Bank of Cleveland's nowcasting model projects a year-over-year core PCE inflation rate of 2.64% for February 2025. These projections imply a gradual alignment toward the Federal Reserve's target, contingent on stable labor markets and anchored long-term inflation expectations.