PCE Inflation – Headline, Core, Trimmed Month-on-Month and Instantaneous

Core PCE y/y 4.7% vs. 4.3% consensus, headline 5.4% vs. 5.0%.

Figure 1: Month-on-month PCE inflation (black), Core PCE (teal), trimmed PCE (tan), and instantaneous PCE inflation, T=12,a=4 (purple). NBER defined peak-to-trough recession dates shaded gray. Red dashed line at expanded Russian invasion of Ukraine. Source: BEA, NBER, author’s calculations.

Month-on-month indicators exhibit lots of volatility, even core and trimmed measures. That being said, m/m measures rose in January. The instantaneous measure (discussed in this post) rose less than the others, unsurprisingly given the weight on previous m/m changes.

44 thoughts on “PCE Inflation – Headline, Core, Trimmed Month-on-Month and Instantaneous

    1. Moses Herzog

      It becomes easier with war in East Europe and serious supply chain problems created by a pandemic. The problem (apparently) is professional economists too dumb to realize the difference between demand caused inflation and what I just mentioned. And it kind of makes you wonder why they ever bothered creating an AD-AS model when guys like Summers and Johnny Cuckrant can’t read one and can’t even tell you which line it was that shifted.

    2. rjs

      the price index for 4th quarter PCE was revised from 3.2% in the advance GDP report to 3.7% in the 2nd estimate…can’t recall that i’d ever previously seen a revision greater than +/- 0.2% before that (in a dozen years)…the proximate reason for that big revision was the revision to 2022 seasonal adjustments in the January CPI report, which the BEA uses to compute the PCE price index..

      1. Macroduck

        I do wonder howmuch the pattern of inflation in 2022 itself led to the revision to seasonal factors. Inflation was very high in H1, low in H2. The adjustment scheme would work to smooth out that difference. I haven’t bothered to find out whether recent periods are given greater weight in the adjustment scheme for CPI.

  1. Macroduck

    Off topic, from January’s personal income data –

    There was a sharp drop in personal income tax payments in January. That drop was responsible for a considerable part of the rise in disposable income and personal income. I’m too lazy to look beyond FRED, and FRED doesn’t have disaggregated data on personal tax payments for January:


    It’s obvious that federal taxes caused a rise in tax payments a year earlier, but all the tax-cut news of late has been at the state level. Anyhow, state tax cuts tend to favor the well-off, so the pass-through to spending won’t be as high as could be with increased spending, assuming this is a state tax thing.

    1. JohnH

      Since MacroDuck went off topic, I’ll follow his lead—Jeffrey Sachs: “ What Ukraine needs to learn from Afghanistan… The US has been heavily arming and funding Ukraine since 2014 with the goal of expanding NATO and weakening Russia. The US’ proxy wars typically rage for years and even decades, leaving battleground countries such as Ukraine in rubble.

      Unless the proxy war ends soon, Ukraine faces a dire future. Ukraine needs to learn from the horrible experience of Afghanistan to avoid becoming a long-term disaster. It could also look to the US proxy wars in Cambodia, Iraq, Laos, Libya, Syria and Vietnam.”

      It is interesting that the Taipei Times picked it up. Are they thinking about what might be in store for them if NATO expands to the Pacific?

      1. Anonymous

        few readers here (except pgl) are aged enough to have seen disney’s uncle remus……

        uncle remus told the tale of the tar baby….

        brer fox kneaded a tar baby out of turpentine, and tar, put it on the ‘rabbit run’ to snare brer rabbit.

        brer rabbit comes along and tries to make conversation, the tar bay is dumb, after a bit of talkin’ brer rabbit punches the tar baby and gets stuck….

        brer fox come up and grabs up brer rabbit, after a bit of cajolin’ brer rabbits pleads with brer fox ‘don’t throw me in that thorny briar patch’. fooled brer fox throws brer rabbit in the briar patch. unlike brer fox we all know rabbits are right at home in the briar patch

        different than the disney tale the donbas tar baby tale brer fox (nato) jumps into the briar patch and gets stuck in long war in putin’s back yard.

        uncle remus could quote sun tzu:

        no prince prospers from long war (jumping in a briar patch) 5000 miles from home!

        and china has plenty of ammunition and drones to sell…..

        1. Moses Herzog


          My 2nd grade teacher used to read us these Remus tales to our entire class. I think at that age (obviously still very naive) I took the tales as comforting for the most part, just listening to the teacher read while the other students were quiet had a soothing kind of “ASMR” feel to it. Our female teacher’s name was “Manski” whether the last letter in her family name was “i” or “y” I’m not sure. When not reading to the students, in most contexts she had a reputation as being a mean/cruel/cold woman in a kind of “Old Maid” stereotype. She had reading glasses with a thick chain that went down from the “temple tips” part of the glasses to the back of her neck, she would wear pants suits (usually a light gray color, similar to the TV character “Matlock”) and my understanding was she was not married. In her own way I think she was smart (for a small town person) and probably knew about some of the subtle racism of the story. Why she chose to focus on that story, when I am pretty sure she must have known the underlying subtext, I can only guess. But I’m pretty certain my solid guesses don’t reflect too well on her. Strange woman.

        2. Macroduck

          Nonsense. We all know you spin everything to make Putin seem like a genius, but it just ain’t so. Ukraine is fighting Russia in the eastern part of Ukraine because Russia got it backside kicked further west. Bad planning, poor training, poor morale on Russia’s part have made for lopsided losses on Russia’s part. Nothing rabbit-like about it.

        3. pgl

          ‘few readers here’ including me think you ever make a real point. Could you follow all of requests and just disappear?

        4. Ivan

          Sure China has plenty of ammunition and drones to sell – but can they afford the backlash?

          Even without western governments using Chinese weapons to Russia as an excuse to sanction China (or put a 10, 25, 40% import tax on their products) – the people of the free world will respond. As a consumer I would immediately start looking for “made in China” and spit on the product rather than buy it. Any company (like Apple) making things in China would receive a nasty letter and a demand that they show me their “de-chinafication plan” unless they want me to switch. The anger at China in Europe would be much worse and their de-chinafication response much stronger. In Europe, Russias attack on Ukraine is not a territorial dispute – its an attack on their way of life and peace since WW2. They will develop a quick and long-lasting hatred of anybody who helps Russia. It is possible that Xi is stupid enough to swap the whole EU market for that of Russia (with a GDP smaller than Spain), but it is not likely. If he does – this huge mistake of Putins will eventually take down two authoritarians; Putin and Xi – and Biden will go down in history as the greatest President of all time

        5. Anonymous

          totally amazed where the comments to the Brer Rabbit briar patch fable went

          how bout if I said Kim Jung un would sent ordnance and mercenaries to get some ‘experience’.

          no sense leaving nato to get all the fun….

      2. Ivan

        Russia sure had to go far east to find some moron who were ready to publish their talking points. Ukraine, Ukraine come to papa Putin, because the US will eventually abandon you – just like they abandoned Germany and NATO? Oh wait those were not the cherry-picked examples. The only relevant examples for Ukraine are non-European countries?

        1. pgl

          Sachs actually thinks Viktor Yanukovych was a good President? Yanukovych’s Presidency is a lot like Trump’s. Kissing up to Putin, selling out his own citizens, and generally considered the worst President in Ukraine’s history. Yea they wanted to impeach this clown a lot like the House impeached Trump. Of course neither nation was able to oust their treasonous ruling through Constitutional means. At least the Ukrainians had the good sense to out Yanukovych anyway. The US should have ousted Trump. Oh but wait – JohnH is a lot like Trump too. Both are Putin poodles. MAGA!

      3. Macroduck

        Oh, my goodness! Johnny is at it again.

        Let’s get to the meat of Sachs’ little essay. What solution does he offer to end the war? Turns out, it’s a childish “everybody hold hands” fantasy based on surrendering territory to Russia:

        “The basis for peace is clear. Ukraine would be a neutral non-NATO country. Crimea would remain home to Russia’s Black Sea naval fleet, as it has been since 1783. A practical solution would be found for the Donbas, such as a territorial division, autonomy or an armistice line.

        “The fighting would stop, Russian troops would leave and Ukraine’s sovereignty would be guaranteed by the UN Security Council and other nations.”

        What a lovely fantasy. “The fighting would stop, Russian troops would leave…” Perhaps, but if so, only because Russia would have been granted territory seized in war. Why, after learning that war pays, would Putin choose peace in the future? What assurance does Sachs offer that is view into the future is correct? The might and good will of the Security Council. What nation exercises a veto on the Council? Russia does. So Sachs says Russia will guarantee Ukraine’s safety from Russia.

        By the way, anyone who pretends to know what Russia will or won’t do once “peace” on Russian terms is achieved should be familiar with Russia’s theory of “new generation warfare”, also known as the “Gerasimov doctrine”. This new warfare ignores the distinction between war and peace – war goes on once peace is declared. It employs civilian suffering as a tool to undermine stability. It stirs up and arms extremist groups to incite insurrection and uses insurrection as an excuse for military intervention. It aims at overthrow of governments. Under such a doctrine, we are to believe Russia won’t continue some version of war against Ukraine once peace is declared? Espcially with that undefined “practical solution” for Donbas flapping in the wind.

        If Sachs is aware of Russia’s doctrine, he cannot reasonably believe Russia would honor a peace with Ukraine, even if Ukraine gave away territory to achieve peace. If Sachs isn’t aware of this doctrine, he has no business pretending to expertise. It’s the same old problem – only ignorance or dishonesty explains the position Sachs has taken. Either way, we have no reason to take him seriously. Same goes for Johnny.

        As to whether Sachs is ignorant or dishonest, let’s check on a simple verifiable assertion of fact: Russia’s Black Sea fleet has operated continuously out of Crimea since 1783? Well, other than during the Crimean War. Oh, and when the White Russian army held Crimea during the Russian Revolution. And during the latter period of Ukrainian sovereignty, before Russia invaded. So Sachs is not above stretching the truth – in much the same was as Putin apologists do in comments here.

        A serious problem here is that Ukrainians don’t want to surrender to Russia. Sachs doesn’t say anything about what Ukrainians want. He merely tells Ukrainians what’s good for them. And what’s good for Ukrainians, oddly enough, is giving Russia what it wants. Ukrainians seem to have a rather different idea about that. And Johnny doesn’t seem to care much about Ukrainians at all.

        1. JohnH

          Ducky is all for a maximalist outcome! We win, they lose. Period! Typical neocon intransigeance. Only problem is that US wars have not ended like that since WWII. The US has caused a whole lot of destruction with little to show for it. Sachs lists the countries destroyed.

          A maximalist outcome! Talk about a fantasy!

          The sooner we start talking, the better.

          1. pgl

            JohnH is also for a “maximalist outcome” which is basically the raping of Ukrainian women and the death of Ukrainian children. Listen dude – your proPutin babble has gone well beyond disgusting. Stop pretending you are for a peaceful world as we all know you better than that.

      4. pgl

        Do you think everyone is as stupid as you are? The threat to Ukraine are the war criminals led by the Kremlin. Oh wait – you are Putin’s chief cheerleader. Never mind – go back to enjoying film of Russian soldiers raping old Ukrainian women and little girls.

      5. pgl

        “In 1979, the US armed the mujahidin — Islamist fighters — to harass the Soviet-backed government in Afghanistan. The US objective was to provoke the Soviet Union to intervene, to trap the Soviet Union in a costly war, former US national security advisor Zbigniew Brzezinski later explained. That Afghanistan would be collateral damage was of no concern to US leaders. The Soviet military entered Afghanistan in 1979 as the US hoped, and fought through the 1980s.”

        Sachs actually blames the US for the Soviet invasion of Afghanistan? Well we have found one person as dumb as JohnH.

        In the meantime a young woman was raped in Times Square and of course it was her fault as she was cute. What utterly repugnant “logic”.

        1. JohnH

          pgl just loves to rewrite history! “Brzezinski acknowledged in an interview with the French news magazine Le Nouvel Observateur in January 1998 that he initiated a policy in which the CIA covertly began arming the mujahedeen in July 1978—six months before Soviet troops intervened in Afghanistan—with the explicit aim of dragging the Soviet Union into a debilitating war.” https://www.wsws.org/en/articles/2017/05/29/zbig-m29.html

          1. pgl

            Gee Johnny boy – all those ladies I know that take boxing and self defense must be begging to be attacked by some rapist in your warped view of the world. Yea we gave them the means to defend themselves against the oncoming Soviet takeover. That does not mean we caused the Soviets to invade – unless you think my female workout partners should lay down and beg to be raped. Oh wait – you actually enjoy it when Putin’s pigs rape Ukrainian women. Never mind – there is no reason to have a conversation with someone as perverted as you clearly are.

          2. JohnH

            When all else fails Mt. Trashmore erupts and garbage and BS everywhere to see what sticks.

            Reality bites, doesn’t it, pgl? Sachs was right.

            And don’t forget that Brezezinski’s “freedom fighters” were the ones behind 9/11.

        2. JohnH

          “ Brzezinski acknowledged in an interview with the French news magazine Le Nouvel Observateur in January 1998 that he initiated a policy in which the CIA covertly began arming the mujahedeen in July 1978—six months before Soviet troops intervened in Afghanistan—with the explicit aim of dragging the Soviet Union into a debilitating war.”

          Pgl is trying to rewrite history…either that, or he’s really dumb.

          1. pgl

            “Bill Van Auken is the Latin American editor of the World Socialist Web Site and a member of the National Committee of the Socialist Equality Party in the United States. He has written and lectured on the history of the Trotskyist movement in Latin America, and has written extensively against the operations of US imperialism around the world.”

            Gee Jonny boy – did you forgot to check the credentials of your little guru here? I bet this clown worked for Stalin. Maybe you worked for Hitler excusing the slaughter of 6 million Jews.

          2. JohnH

            pgl can’t refute the fact that the US provoked the Soviet Union into Afghanistan, so he shots the messenger…his usual modus operandi.

          3. pgl

            February 27, 2023 at 2:20 pm
            pgl can’t refute the fact that the US provoked the Soviet Union into Afghanistan, so he shots the messenger…his usual modus operandi.”

            The facts? Seriously dude – you would make a terrible defense attorney for any piece of trash that actually raped someone. And some opinion piece from a Putin poodle deserves to be shot. But keep you little childish retorts as the other kiddies are laughing at you.

      6. baffling

        “Unless the proxy war ends soon, Ukraine faces a dire future. ”
        so Johnh, the propaganda machine, chooses to argue that ukraine should stop letting the usa destroy it through a proxy war. notice there is no comment about the the unjustified invasion by russia to cause all of this in the first place. no, it cannot be russia’s fault. it is the fault of the usa that russia invaded and laid waste to an innocent country. johnh, you are full of crap. what a dishonest argument you have tried to make. if ukraine it laid to waste, it will be the fault of russia, not the usa.

        i suspect johnh is not rooting for the russian invasion of moldova next.

        1. pgl

          When Putin does invade Moldova – Jonny boy and Marjorie Taylor Greene will say it is all Biden’s fault.

  2. Econned

    The FOMC has work to do. Or do they? Because they haven’t been clear regarding their current objective function under FAIT, it’s tough to discern. Mishkin, et al (2023) don’t sound to be very confident in the committee’s ability to tame current inflation and also don’t think the potential benefits of increasing the target rate of inflation outweigh potential costs. Interesting times.

    1. Gregory Bott

      Inflation is already tamed. Rate hikes are irrelevant. Wait until the 10 year touches 3% after people notice the so called inflation really didn’t spike……………

      1. Econned

        Hi Gregory Bott,
        I’m not sure “inflation is already tamed”. And neither are experts. What makes you suggest such???

    2. pgl

      Since Econned is too lazy to tell us what he means by FAIT – here you go:


      The Federal Reserve now intends to implement a strategy called flexible average inflation targeting (FAIT). Under this new strategy, the Federal Reserve will seek inflation that averages 2% over a time frame that is not formally defined. This means that after long periods of low inflation, the Federal Reserve will not enact tighter monetary policy to prevent rates higher than 2%. One benefit of this flexible strategy to managing the mandate of price stability is that it will impose fewer restrictions on the mandate of full employment.

    3. Macroduck

      I’m not aware of the period used for averaging inflation under flexible average inflation targeting. There may be (have been) one, but I don’t know it. However, if we look at the annual core PCE inflation over and undershoot since the end of the housing recession, inflation overshoot in 2021 and 2022 do not yet quite make up for the undershoot in the 2009-2020 period:


      All Fed folk have to do is claim they are using some shorter period for their average, and they can justify a period of inflation undershoot to balance the overshoot in 2021-2022. I suppose that’s what “flexible” is for.

      The rationale for FAIT was to to restore Fed influence over inflation expectations when a long period of failing to raise inflation to target suggested the Fed was losing influence. Two problems with that plan:

      – There isn’t any good evidence that the public knows what the Fed’s inflation target is, much less that the Fed has adopted flexible average inflation targeting. FAIT works through messaging, and messaging doesn’t work.

      – The recent bout of above-target inflation fits into FAIT framework only if there is no limit on the speed at which the average is returnd to target. Fed officials have made clear, through word and deed, that there is a limit, and 5% inflation returns the average to target too quickly. In other words, the Fed has lost control over inflation in both directions; after adopting a policy meant to account for the fact that the Fed failed to raise inflation to target for a decade, we now have evidence that the Fed couldn’t prevent inflation from rising too far above target.

      It is simply not true that inflation is “whatever the Fed wants it to be, plus or minus a residual”. That was an illusion. Since it was an illusion, FAIT is built on two illusions. In reality: 1) the public doesn’t know what the Fed’s policy is, and 2) the Fed doesn’t have very good control over inflation.

      No new framework other than FAIT has been adopted. Fed policy is, for now, incoherent.

    4. Macroduck

      Speaking of incoherence, most any conventional Taylor rule formulation using realized inflation gives you a fed funds rate target between 6% and 8%. Apply some pretty heavy interest rate smoothing and you can bring this down, with the understanding that rates will continue to rise for a while to accommodate that smoothing.

      Use inflation expectations (Philly Fed professional forecasters 4 quarters ahead) and you can easily get a 4.5% funds target. Fiddle with other parameters and it and the target can be nudged lower. The current funds target range is 4.50% to 4.75% and Fed folk have as much as promised more rate hikes. So inflation expectations aren’t driving policy. It looks like realized inflation with rate smoothing is the best explanation for FOMC behavior.

      Realized inflation is backward looking. Expectations are forward looking. So the Fed can avoid the accusation of incoherence by admitting to being backward looking.

      Here’s the toy, for those who want to play along:


  3. Gregory Bott

    January is basically catchup month for inflation. Couple that with “ad hoc” inflation from energy, you get a fake spike. Lets note the same was happening in 2020 as well after 2019 inflation was revised up. It is pretty common. Not only is this going to reverse, its going right when housing’s lags catchup and it deflates.

  4. Anonymous

    I’m getting the strong impression that there is some selectivity on how you report the monthly inflation numbers. Choosing TTM versus annualized, choosing total (“headline”) versus subset (“core”), and if decreases get more prominence than increases.

    At the end of the day, this is data and should be subject to data analysis. But I get a strong vibe of political emphasis in how you present things. Not saying the right doesn’t do this also. But you should play it down the middle. Not try to cover for Biden. I keep wondering how your posts would look if Scott Walker had rolled in in JAN21, rather than Biden replacing Trump.

    1. Menzie Chinn Post author

      Anonymous: Can you be bothered to read the legend to the graph? Those *are* annualized numbers (that is month-to-month annualized by taking the factor to 12th power, and subtracting one). The graph also includes headline as well as core. By the way, the reason I note conensus vs actual in m/m non-annualized is *because Bloomberg reports consensus in these terms*.

      I am sorry to not conform to your idea of what “down the middle” is.

    1. Moses Herzog

      @ AS
      Thank you very much for sharing this. Are my subjectively biased eyes deceiving me, or does the color green seem to be dominating the bar chart from roughly April 2021 onward?? This is a genuine question. Anyone is welcome to answer. Larry Summers are you out there?? Johnny Cuckrant?? Hello….. ??

  5. JohnH

    MacroDuck: 1) “the public doesn’t know what the Fed’s policy is” They never did. No surprise there.
    2) the Fed doesn’t have control over inflation.

    Claudia Sahm: “ Reality Bites

    In January 2014—over seven years ago—Alan Detmeister, Jean-Philippe Laforte, and Jeremy Rudd wrote a memo to the FOMC, delivering some bad news about inflation:

    The observed evolution of the empirical inflation process over time, the difficulty we [the staff] often have in explaining historical inflation developments in terms of fundamentals, and the lack of a consensus theoretical or empirical model of inflation all contribute to making our understanding of inflation dynamics—and our ability to reliably predict inflation—extremely imperfect.

    Fedspeak translation: We don’t know what’s driving inflation. You don’t either. The memo also discusses why inflation expectations aren’t likely a good explanation.”

    To quote the inimitable Yogi, if you don’t where you’re going, you probably won’t get there.

    1. pgl

      You of all people should not opine on macroeconomics or monetary policy. After all – you are more of a gold bug than that old fool know as Ron Paul.

      1. pgl

        “the Fed doesn’t have control over inflation”

        Odd Rudd did not say that. Neither did Sahm. Of course little Jonny boy loves to cherry pick quotes from things he has either failed to read or is incapable of understanding.

        Dude – when the grown ups are talking – little kiddies like you should stop chirping BS.

Comments are closed.