Investors and consumers alike are bracing for Friday’s release of the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred gauge of inflation. But while the data will provide a fresh look at price pressures, many Americans may have already drawn their own conclusions—and they aren’t optimistic.
Consumer expectations for inflation over the next five years have surged to their highest level since 1995, driven partly by concerns over potential tariffs proposed by former President Donald Trump. The prospect of new trade barriers has rattled confidence, fueling fears that inflation could remain stubbornly high.
A hotter-than-expected PCE report could only add to those concerns, creating a troubling mix for investors and households. If inflation appears to be heating up again, it could challenge hopes for interest rate cuts from the Federal Reserve, further tightening financial conditions.
With uncertainty looming, Friday’s report could set the tone for markets and policymaker decisions in the months ahead. Whether inflation is cooling or just taking a breather remains to be seen.
Source: Federal Reserve