There's more evidence that the economic narrative could be undergoing a significant shift.
For months, we've been living in an economy where strong demand has been met with lagging supply, causing inflation to surge.
In the past, we talked about how economists across the board were saying that inflation — as measured by year-over-year increases in prices — had peaked.
We recently got more evidence to confirm that may be the case.
The Fed's preferred measure of inflation climbed 4.9% in April from a year ago, the core PCE price index. This is down from the 5.2% rate in March and the 5.3% peak rate in February.
On a month-over-month basis, the core PCE price index has climbed by a cool 0.3% over the past three months.
While this seems like good news, it's still too early to claim victory on inflation.
"Many have touted March as the peak in inflation and are looking for inflation to cool from here," Grant Thornton Chief Economist Diane Swonk said. "We are not as convinced given the risks we still face due to the war in Ukraine and lockdowns in China. It is important to note that any cooling we see will have a high floor. Both the overall and core PCE indices remain well above the Federal Reserve's 2% target."
Indeed, inflation has a long way to go to get to 2% from 4.9%.
And so, we'll have to keep an eye on the incoming data to see if a major shift in the economic narrative is indeed underway.
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