US Personal Spending Beats ForecastsUnited States Personal Spending
Personal spending in the US jumped 1.8% month-over-month in January of 2023, rebounding from a downwardly revised 0.1% drop in December and beating market forecasts of a 1.3% rise. It is the biggest increase since March of 2021, in a sign the consumer spending started the year on strong footing. Within goods, the increase was widespread and led by motor vehicles and parts as well as "other" nondurable goods (led by pharmaceuticals). Within services, the largest contributor to the increase was spending for food services.
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US Stock Futures Extend LossesUnited States Stock Market
Stock futures contracts tied to the three major indices were down more than 1% on Friday, as hotter-than-expected US inflation reading cemented expectations that the Fed will stick to its monetary tightening trajectory. The Commerce Department reported that the core PCE price index, the Federal Reserve's favorite inflation measure, came well above expectations, pushing back on the idea of a policy pivot any time soon. Meantime, growing geopolitical tensions between the US and China over the war in Ukraine discouraged investors from turning bullish. Major averages in the US are heading for a weekly decline, with the S&P 500 on track for its worst week since Dec. 5th, the Dow poised for its fourth straight losing week, and the Nasdaq 100 on pace for its second negative week out of three.
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US Core PCE Inflation Rises More than ExpectedUnited States Core PCE Price Index MoM
Core PCE prices in the US, which exclude food and energy, jumped by 0.6% month-over-month in January of 2023, compared to a downwardly revised 0.2% increase in the previous month and above market estimates of 0.4%. The annual rate, the Federal Reserve’s preferred gauge to measure inflation, rose by 4.7% and surpassed market expectations of 4.3%, backing signals from Fed policymakers that interest rates must be higher for longer to tame unsustainable price growth. Meanwhile, the headline figure rose by 0.6% from the previous month.
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