The Fed's preferred inflation gauge — covers a broader basket than CPI with different weights.
PCE typically runs 30-50 bps below CPI due to substitution effects (consumers switch to cheaper alternatives). Fed targets 2% PCE inflation. Core PCE (ex food and energy) is most-watched policy variable.
The Fed's preferred inflation gauge — covers a broader basket than CPI with different weights. PCE typically runs 30-50 bps below CPI due to substitution effects (consumers switch to cheaper alternatives). Fed targets 2% PCE inflation. Core PCE (ex food and energy) is most-watched policy variable.
In economics, PCE (Personal Consumption Expenditures) is one of the building blocks investors use to compare opportunities and assess risk. Understanding it helps you read research notes, earnings reports, and market commentary without getting lost in jargon.
PCE typically runs 30-50 bps below CPI due to substitution effects (consumers switch to cheaper alternatives). Fed targets 2% PCE inflation.
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