What is the Personal Consumption Expenditure (PCE) Price Index?

The U.S. Bureau of Economic Analysis (BEA) Monthly reportoutlines the state of consumer spending in the face of rising inflation. While consumer spending outperformed expectations, the impact of inflation on low-income Americans is growing.

Contents of the report:

according to BEAthe Personal Consumption Expenditure (PCE) Price Index is “known to capture inflation (or deflation) across a broad range of consumer spending and reflect changes in consumer behavior.”

Consumer spending in June beat some experts’ expectations. A. Reuters poll Economists forecast a 0.9% increase in spending, but an increase of 1.1%, or $181.1 billion. Adjusted for inflation (to 2012 rates), private consumption increased by only 0.1%.

The PCE price index rose 1%, almost doubling from 0.6% in May. His PCE index for June is 6.8% higher than he was last year. CNN.

Americans’ disposable income (DPI) increased nominally by 0.7%, but after adjusting for inflation, we find that the real DPI decreased by 0.3%.

Numbers in context:

Consumers are spending slightly more than last month Reuters Young people and low-income groups report over-utilizing themselves. A study by VantageScore found that credit card balances for people under the age of 25 increased by 30% compared to his year ago, and those with credit scores below her 660 increased by almost 25%.

This rapid inflation could lead to an even greater financial burden for these more vulnerable groups.of Economic Policy Research Institute reports that “the current federal minimum wage of $7.25 an hour is worth less than at any point since February 1956.” In 1956, the minimum wage was $0.75 an hour.

according to Washington Post, a modest increase in consumer spending combined with a decline in personal income has created an unsustainable imbalance. With this imbalanced tension felt by more and more people, consumer behavior could change quickly. For personal consumption (68% of national GDP) declines significantly, the recession may continue.

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https://www./u-s-world/2022/8/1/23287145/latest-inflation-report-explained-americans-are-over-leveraged-and-still-spending What is the Personal Consumption Expenditure (PCE) Price Index?

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