Staff Reports
The Personal Consumption Expenditures (PCE) price index has once again increased, proving that the Biden administration’s claims of inflation “going down” are simply not true. Despite the struggles of everyday Americans, PCE inflation rose by 0.4 percent in September, according to the U.S. Commerce Department’s Bureau of Economic Analysis (BEA). To make matters worse, the core PCE, which excludes volatile food and energy costs, increased by 0.3 percent, triple the previous month’s increase. This wrong-way acceleration of inflation is clearly shown in the chart below.
In month/month terms, headline PCE #inflation (blue) +0.4% vs. +0.4% prior; core (orange) +0.3% vs. +0.1% prior pic.twitter.com/XZMU6Dgcae
— Liz Ann Sonders (@LizAnnSonders) October 27, 2023
On an annual basis, comparing September 2023 to September 2022, the PCE price index increased by 3.4 percent, and core PCE inflation soared by 3.7 percent. These numbers far exceed the Federal Reserve’s target inflation rate of just 2.0 percent. As if that wasn’t bad enough, the September PCE data also revealed that personal incomes only increased by 0.3 percent, falling short of expectations. This means that once again, inflation is outpacing Americans’ earnings, resulting in yet another month of negative real wages for workers.
It’s clear that the Federal Reserve’s interest rate hikes, which are at their highest level in over 20 years, have not been effective in combating inflation. This can be attributed, in part, to the irresponsible spending policies of the Biden administration, which have created a false sense of economic growth. However, this mirage of prosperity cannot last forever. Perhaps President Biden hopes to maintain the illusion of a strong economy until after the 2024 election? Unfortunately for him, the American people are not buying what the White House is selling. Public opinion of Biden’s performance, particularly in regards to the economy, has been consistently negative due to persistent high inflation.
The Federal Reserve is scheduled to meet at the end of October, and it’s expected that they will once again announce a decision on interest rates. Given the alarming acceleration of inflation reported in the September PCE price index and the latest GDP data, it seems the Fed doesn’t have much of a choice but to raise rates yet again. However, the need to curtail excessive spending hasn’t always translated into actual action from the Fed. Let’s hope they prioritize the well-being of the American people over political considerations.
