The latest Personal Income & Outlays snapshot delivers a familiar soft-landing mix: inflation continues to drift lower, real spending remains positive, but the forward “fuel” for consumption—real disposable income—is losing momentum. When you add the sharp pullback in durable goods, the message is clear: the consumer is still moving, but not accelerating.
Below is a simple way to read your table: compare today’s pace (Monthly, 3-Mo MA, Annual) against the recent norm (Avg Monthly, Avg Annual). That gap tells you whether conditions are tightening or loosening relative to trend.
1) Core PCE inflation: improving, but not “done”
Core PCE (ex food & energy):
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0.20% m/m
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0.22% 3-month moving average
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2.83% y/y
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Versus 0.26% avg monthly and 3.24% avg annual
This is the disinflation story in one line: core inflation is running below its own recent average pace. That’s good news for “inflation risk,” but the level still matters. A 2.83% year-over-year reading is meaningfully below last cycle highs, yet still above the Fed’s 2% target.
The monthly and 3-month averages are especially important because they capture the more current trend. At 0.20–0.22%, inflation is closer to “normalizing” than “re-accelerating.”
Takeaway: Progress continues, but the bar for rate cuts is not only inflation falling—it’s inflation falling and staying near target with confidence.
2) Real PCE: still positive, but this month was soft
Real Personal Consumption Expenditures (Real PCE):
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0.04% m/m
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0.22% 3-month MA
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2.14% y/y
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Versus 0.18% avg monthly and 2.19% avg annual
The headline looks steady: 2.14% y/y is basically in line with its longer-run average. But the month-to-month print is weak (0.04%), and that’s worth noting because monthly momentum is often where turning points begin showing up first.
However, the 3-month moving average is still 0.22%, which suggests the broader trend in spending remains intact even if the latest month is a wobble.
Takeaway: The consumer is still spending in real terms, but the near-term pace is softer than normal.
3) Durable goods: the clearest sign of cooling demand
Real PCE: Durable Goods:
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-0.60% m/m
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0.25% 3-month MA
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2.07% y/y
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Versus 0.39% avg monthly and 4.72% avg annual
Durable goods are volatile—they swing with promotions, vehicle sales timing, and financing conditions. Still, -0.60% in one month is a meaningful drop, and the longer comparison tells the deeper story:
Durables have gone from “high-growth” to “normal growth.” The year-over-year rate (2.07%) is less than half the longer-run average (4.72%). That gap matters because durables often reflect the areas most sensitive to interest rates and credit.
Takeaway: Higher rates are still doing their job—especially on big-ticket, credit-dependent purchases.
4) Real disposable income: slowing support for future spending
Real Disposable Personal Income:
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0.06% m/m
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0.15% 3-month MA
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1.95% y/y
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Versus 0.27% avg monthly and 3.17% avg annual
This is the part of the table I’d watch the closest.
Real consumption can stay resilient for a while even when income slows—people can draw down savings, shift spending mix, or use credit. But over time, spending trends tend to follow income trends. With real disposable income running well below its average monthly and annual pace, it suggests the consumer’s “runway” is shortening.
Takeaway: If income growth doesn’t re-accelerate, spending growth usually cools next.
The macro message: soft landing, but with visible friction
Put all four rows together and you get a consistent narrative:
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Inflation is easing (core PCE below its trend).
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Real spending remains positive (still solid year-over-year).
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Durables are cooling (rate sensitivity showing).
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Income growth is slowing (future consumption risk rising).
This is exactly what a late-cycle soft-landing phase often looks like: inflation improves, overall activity holds up, but the most rate-sensitive categories show fatigue first—and income becomes the key constraint.
What I’m watching next
If you want to build a “next release checklist,” here are the items that will confirm whether the soft month in spending is noise or signal:
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Does Real PCE rebound from 0.04% m/m, or does it stay soft?
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Do durables stabilize after -0.60%, or do they keep sliding?
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Does real disposable income move back toward its average pace?
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Does the 3-month core PCE trend keep drifting toward ~0.17% m/m territory (a pace consistent with 2% inflation over time)?
Bottom line
Inflation is moving in the right direction, but the consumer is beginning to show more sensitivity—especially in durable goods—and income growth is slowing. That combination doesn’t scream recession, but it does suggest the economy is transitioning from “resilient” to “more balanced,” where growth is still positive but less forgiving.
