Inflation Is Finally Coming Down To A Number That People Like...

In Today’s Very Short (6th) Edition of “Element, by Arsh“ -

• New Data From Seen In PCE Index Shows Inflation Is Slowing Down…

INFLATION

Inflation Is Growing Slower, But Is It Really Great News?

Inflation Is Slowing. On Friday, the Bureau of Economic Analysis (BEA) released the PCE (Personal Consumption Expenditure) Index’s newest numbers, and they were at 2.2%, which is apparently great for the American consumer.

What is the PCE Index? As mentioned above, PCE stands for Personal Consumption Expenditure, and it tells us how much the cost of everyday things increased in the past 3 months (compared to the same time last year). The Federal Reserve, which basically sets the interest rates for the country likes to see this data to see if their policy of either increasing or decreasing interest rates is working or not. Currently, we have very high interest rates, which The Federal Reserve had decided to implement to reduce inflation. The goal of the Fed was to bring the inflation number (PCE Index) down to 2%, and now that the PCE Index is close to 2%, the Federal Reserve is planning to reduce interest rates, making it easier for people and businesses to get loans.

Wait. So, this is great news? Oh yes! The Federal Reserve likes it when the average inflation is at a moderate 2%, but that number reached over 9% in June 2022. So, they have definitely done significant work on this. However, with inflation reducing so rapidly, some economists are thinking that it could turn into a recession. However, there is no benefit in speculating, and if we were to have a recession, alarm bells would be ringing way louder than they currently are, in my opinion.