Consumer spending, inflation rose in July

Aug. 31:

The Personal Consumption Expenditures price index, the key inflation metric the Federal Reserve monitors, was up 0.2% in July. The index rose 3.3% year over year, up from 3.0% annual growth in June. While prices for goods dropped 0.5%, prices for services increased 5.2%.

The core PCE, which excludes food and energy, was also up 0.2% for in July and rose 4.2% year over year, just a bit faster than June’s 4.1% annual increase.

The slight increases in the rate of inflation indicate the path to the Fed’s 2% target will take a while yet, but the number grabbing headlines this morning was the 0.8% jump in personal spending in July. It follows a 0.6% increase in spending in June. Personal income rose 0.2% in July.  

New unemployment claims continue to drop

Weekly initial jobless claims have been dropping each week for the past three weeks. There were 228,000 claims last week and the four-week moving average is now at 237,500.

Pending home sales rose 0.9% last month

Pending home sales were up 0.9% in July, with contract signings increasing in the South and West.

State of the market

This morning, the Dow traded up and rates were up modestly as we await the outcome of Friday’s employment report.

Economic calendar

Friday, Sept. 1

• Monthly Employment Report
• Construction Spending
• ISM Manufacturing PMI

By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking