May 2025 PCE Estimate

On Friday, we will get the May PCE Inflation. Since I started publishing my PCE estimates in Mar 2024, my average error for forecasting headline PCE has been a perfect 0 bps. Apr headline PCE came in at +0.10% MoM, which was +1 bps above my estimate.

My average error for forecasting core PCE is also a perfect 0 bps. Apr core PCE came exactly in at +0.116% MoM, which was +1.6 bps above my estimate.

All of my PCE estimates were published here on Substack before the actual numbers went out. Here is the one for Apr 2025:

Without further ado, here are my May PCE estimates…

• Headline PCE

  • +0.1% MoM and +2.3% YoY

• Core PCE

  • +0.1% MoM and +2.6% YoY

If we get these numbers, they are unlikely to make the Fed cut in Jul (although Waller hinted he would be willing to support such an action). However, if the Fed gets other convenient data, Jul could be a live meeting. Whether they actually cut in Jul or not will ultimately depend on the Jun CPI and Jun Employment Report.

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