On Friday at 8:30 am ET, we will get the Aug PCE inflation, which will be an important piece of information in determining what the Fed does next. Some Fed officials, like Miran and Kashkari, are expecting more rate cuts this year, but some others, like Musalem, Hammack, and Bostic, think there will be no more rate cuts in 2025. Depending on what they see in the Aug PCE inflation data, some of them might change their view either way.
Since I started publishing my PCE estimates in Mar 2024, my average error for forecasting headline PCE has been an almost perfect -0.5 bps (-0.005 pp).
My average error for forecasting core PCE is -0.7 bps (-0.007 pp).
My Jul PCE estimates were perfectly in line for headline PCE at +0.20% MoM and almost perfectly in line for core PCE at +0.26% MoM, which was -1 bp below the actual +0.27% MoM.
Jul 2025 PCE Inflation Estimate
On Friday, we will get the Jul PCE Inflation, which would be another piece of the puzzle in determining Fed actions going forward. Depending on what we get on Friday, PCE inflation could determine whether the Fed cuts in Sep, but also what it does after Sep.
All of my public PCE estimates were published here on Substack and can be accessed directly on the Arkomina Research Substack profile or the following website: www.ArkominaResearch.com.
Aug PCE is important because it can determine what the Fed does in Oct. So, where will it print?
My Aug PCE inflation estimates are…
Headline PCE
+0.2% MoM and +2.7% YoY
Core PCE
+0.2% MoM and +2.9% YoY
If we get these numbers, they will likely be supportive of another 25-bps cut in Oct. Whether we actually get that cut next month will ultimately depend on the Sep Employment Report and Sep CPI report.
If you’re interested in learning my Sep CPI estimates and Sep Employment Report estimates, consider subscribing to premium Arkomina Research, which includes 3 extremely comprehensive publications sent each day, month, or before each Fed meeting to your inbox:
Marko’s Brain Daily: Sent each trading day around 6:00 am ET, covering prior-day macro indicators and events (e.g., Fed speeches, meetings), daily estimates for key indicators with market reaction scenarios, short-term equity and bond market outlooks, plus earnings, tariffs, trade deals, fiscal policy, and other important analyses.
Marko’s CPI Report: Delivered each month several days before BLS CPI, featuring a comprehensive analysis of CPI data, forward-looking inflation indicators, a detailed CPI forecast for the current month, a preliminary CPI forecast for next month, and a CPI trajectory (headline and core) 4 quarters out.
Marko’s Fed Report: Delivered before each Fed meeting, containing macroeconomic and monetary policy analyses with a focus on indicators closely watched by the Fed. It answers what the Fed will likely do at its upcoming meeting, what it may do 4 quarters out, pictures the current economic situation, and also contains analyses of monetary policy lags, trajectories for the unemployment rate, PCE inflation 4 quarters out, Employment Report estimates, and more.
You can get these publications by subscribing to Arkomina Research Pro Investor at: ArkominaResearch.com/Subscriptions.
DISCLAIMER
These articles are for discussion and educational purposes only.
Past performance is no guarantee of future results.
Although specific securities and economic forecasts may be discussed in articles, you should NOT construe any comment as a call to buy or sell any security or as legal, tax, investment, financial, or other advice. Consult your own advisors if you require such advice.
ANY USE OF THESE ARTICLES IS AT YOUR OWN RISK AND LIABILITY. Neither Arkomina Consulting Ltd nor Marko Bjegovic, as its director or any employee, accepts any liability whatsoever for any direct, indirect, consequential, moral, incidental, collateral, or special damages or losses of any kind.
Why not put the concensus estimates as well. Each time, we have to look for them by ourselves. Thank you
The best and most consistent inflation estimates out there. Thank you so so much