May PCE Report

My analysis of the May PCE report.

Here are some interesting facts:
- Core PCE, PCE, and PCE for goods (MoM Changes): All of these MoM changes are now simultaneously below their respective 25th percentile of MoM changes, based on data from the years 2000 to 2019, which is the first time since December 2023.
- Real disposable personal income, real PCE, and Wages and Salaries (MoM changes): All of these MoM changes are now above their 50th percentile, indicating that their changes are higher than 50% of historical MoM changes over at least the past 15 years. This is the first time since January 2023

In summary, the May PCE report supports the narrative that we are likely returning to a disinflationary trajectory, reinforcing the expectation of a rate cut from the Fed in September. It also brings a sigh of relief after a series of weaker economic data releases in the past week. The report indicates that consumer resilience is expected to persist in the coming months, contingent on stable labor market conditions.