On a month-over-month basis, headline PCE accelerated at 0.6 percent, faster than the 0.4 percent rate in each of the prior three months. Core PCE also shot up, with October’s month-over-month rate of 0.4 percent coming in at double the rate in September, with both gauges showing inflation picking up its pace and suggesting higher price pressures are more entrenched than Biden administration officials and Fed policymakers expected.
Surging prices have become a key theme amid the economic recovery and a pain point for President Joe Biden, whose approval ratings have slumped. A new NPR/Marist poll showed Biden’s approval rating at 42 percent, the lowest reading since he took office, with inflation being the top concern among survey respondents.
The poll showed inflation as the chief worry (39 percent), followed by wages (18 percent), and labor shortages (11 percent). Worries about housing costs, unemployment, and elevated gas prices were tied at 9 percent each, the poll showed.
The PCE inflation data will probably fuel policymaker anxiety, with Fed officials likely to mull accelerating the pace of phasing out the central bank’s massive $120 billion-per-month asset-buying program. At a policy meeting in early November, Fed officials decided to start reducing the monthly bond buys at a pace of $15 billion per month, though they left the door open to a faster schedule.
A number of economists, including several Obama-era advisers, have taken aim at the Biden administration and the Fed over the inflationary surge.
“We’ve got to recognize our problem is not that not enough people have jobs,” Summers told the outlet. “The current problem is that we are pushing demand into the economy faster than supply can grow and that we are just going to get more and more inflation until we stop doing that,” he said.
“That’s the real problem,” he added.