US inflation remains elevated as GDP growth outlook improves

The Bureau of Economic Analysis released its latest batch of economic data showing the Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, rose 3.7% year-over-year in July. That matched June’s reading and came in above the 3.6% economists had penciled in. The numbers behind the stubbornness Core PCE, which strips out volatile food and energy prices, held steady at 3.3% on an annual basis. Inflation has now exceeded the Fed’s 2% target for 65 consecutive months. The Consumer Price Index, a separate but related measure, offered a small consolation. CPI came in at 3.4% year-over-year in July, ticking down from 3.5% in June. Energy costs continue to be a primary villain in this inflation story. Geopolitical tensions in the Middle East have kept energy prices elevated, and those costs ripple through virtually every sector of the economy. Growth finds a second wind The BEA maintained its estimate for second-quarter real GDP growth at an annualized rate of 1.5%. What caught attention was the upward revision to consumer spending growth, bumped from 3.2% to 3.4%. Looking ahead, economists have grown more optimistic about the third quarter. Some forecasts now ...