On Tuesday, the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) released the PCE Price Index, and the latest report shows inflation is still not backing down. Specifically, it increased by 0.2% compared to June and by approximately 3.7% year-over-year. At the same time, the core PCE index, which excludes food and energy prices, also rose by 0.2%.
The report indicates that inflation continues to exceed the U.S. central bank's 2% target, despite many expecting a decrease in July. Essentially, the cost of all goods Americans buy daily has risen; although their wages have also increased, they have not spent these additional funds.
"Personal saving was $712.0 billion in July, and the personal saving rate—that is, personal saving as a percentage of disposable personal income—was 3.0 percent," the PCE report states.
Nigel Green Warns: Stagflation Is Knocking on America's Door
In a note provided to Bitcoin.com News on Wednesday, Nigel Green, CEO of global financial consultancy Devere Group, detailed that the U.S. economy is showing warning signs of stagflation. Following the release of the BEA report, Green explained: "Growth is slowing, while inflation refuses to come down. Combine these two trends—and you have the looming specter of stagflation."
Green explained that such a combination puts pressure on the Fed. "The central bank can fight high inflation by raising rates, or support weakening growth by lowering them, but not both at the same time. This data suggests the U.S. economy may now require both actions simultaneously," said Green. The head of Devere Group believes this will lead to the federal funds rate being held steady.
Green stated:
"The markets interpret holding rates steady as an act of caution. I interpret it as a sign that the Fed is running out of good options."
Markets Show Little Reaction as Bitcoin and Gold Prices Dip Slightly
The market showed little reaction to the latest PCE price index data. The four main Wall Street indices were still in positive territory at the opening bell. Gold prices saw a moderate decline to $4,626 per troy ounce, and silver fell to $68.31.
The price of Bitcoin also saw a slight decline after surpassing the $81,000 mark earlier this week. Over the past 24 hours, the price of $BTC has fluctuated between $77,250 and $79,539 per coin. As of Wednesday at 11:00 AM Eastern Time (EDT), $BTC is trading at $77,600 per coin.
Wall Street Eyes Warsh, Employment Data, and September FOMC Meeting
In the coming weeks, observers of equity markets, precious metals (PM), and crypto assets will be closely watching various factors. These include the first speech by new Fed Chairman Kevin Warsh at the Jackson Hole symposium, as well as the Federal Open Market Committee (FOMC) decision in September. Analysts and strategists will also be closely monitoring employment data and the August jobs report ahead of the mid-September FOMC meeting.
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