Sticky PCE Inflation and Weak Consumer Confidence Keep Fed in Tight Spot

• GDP: 1.5% growth in Q2, sluggish but steady
• Inflation: Core PCE holds at 3.3%, headline at 3.7%—both above target
• Jobs: ADP employment data shows solid labor market
• Consumer Confidence: Falls to seven-month low of 89.4

The Checkup

The Fed’s preferred inflation gauge, core PCE, came in exactly as expected at 3.3% annually, but headline PCE surprised to the upside at 3.7%, keeping the pressure on the central bank to consider further tightening....