The US economy slowed its growth rate to 1.5% in the second quarter, falling short of analysts’ expectations. At the same time, inflation, as measured by the personal consumption expenditures (PCE) index, stood at 3.7% in June, with the core index at 3.3%, remaining significantly above the Federal Reserve’s target level.
According to official data from the US Department of Commerce, gross domestic product (GDP), adjusted for seasonal fluctuations and inflation, grew by 1.5% from April to June. Economists surveyed by Dow Jones had forecast growth of 1.8%, while the economy expanded by 2.1% in the first quarter.
A separate report indicated that the personal consumption expenditures (PCE) price index, a key inflation gauge for the Fed, decreased by 0.1% month-over-month after seasonal adjustment, corresponding to an annual inflation rate of 3.7%. Both figures aligned with forecasts.
Core inflation and Fed policy
Excluding food and energy prices, the core PCE index rose by 0.1% month-over-month, with an annual rate of 3.3%. Analysts had anticipated a monthly increase of 0.2% and annual inflation of 3.3%.
While the Fed officially focuses on the overall PCE figure, most central bank representatives view core inflation as a more accurate indicator of long-term price trends.
Source: CNBC
