Federal Reserve’s preferred inflation gauge cools off for the first time in a year

The Federal Reserve’s main inflation tool stopped moving in March, breaking its nearly year-long stretch of steady increases, according to data shared Wednesday by the Bureau of Economic Analysis. The personal consumption expenditures (PCE) price index, the number the Fed watches closest, was flat last month compared to February. Stripping out food and energy, core PCE also didn’t move. It was the softest reading since 2019. Consumer spending, however, didn’t slow down. Inflation-adjusted outlays jumped 0.7% in March, with February’s number bumping higher too. That means people were spending hard—most likely trying to stock up before the latest wave of Donald Trump’s tariffs take hold and raise costs on almost everything. Consumers spend ahead of tariffs as GDP contracts The March report wrapped up a shaky quarter. The US economy shrank by 0.3% in the first three months of 2025—the first contraction since the beginning of 2022. The shrink came off a massive spike in imports, which many companies rushed in before the tariffs fully kicked in. Meanwhile, core PCE inflation jumped to a 3.5% annual rate in Q1, the highest pace in over a year, meaning prices were already running hot before March’s pause. Wall Street didn’t love the news. The S&P 500 stayed red. Treasury yields bounced. The dollar was all over the place. Everything pointed to traders trying to figure out what the hell comes next. As all of this dropped, President Donald Trump went straight to Truth Social to try and rewrite the story. “This is [Joe] Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th,” Trump posted. Minutes after the Department of Commerce released the GDP data, he was already throwing blame around. He kept going. “Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden ‘Overhang,’” Trump wrote. He added: “This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!” The numbers disagree. The 3.6% jump in PCE inflation across the full quarter is way up from the 2.4% gain in Q4 of 2024. Trump might say the boom is coming, but right now, the data looks ugly. The March pause in inflation is just a slice of the quarter—and the rest of it was still burning hot. Hiring slows, market stumbles, Trump tries to redirect Things got worse Wednesday morning when ADP published April’s private payrolls report. Hiring was weak, with just 62,000 new jobs when Wall Street expected 120,000. It was the smallest payroll gain since July 2024 and a sharp drop from March’s already-soft 147,000, which got revised down. Investors bailed. Markets opened down and stayed there. Corporate earnings didn’t help either. The whole thing hit just hours before Trump was scheduled to host over two dozen business executives at the White House. Still, Trump keeps pumping the brakes on blame. During a Tuesday night speech marking his 100th day back in office, he claimed, “Prices are coming way down,” and said, “That’s what I’ve done.” The report that came out less than 24 hours later said the opposite. Inflation didn’t fall. It rose sharply. The Federal Reserve’s metric climbed to 3.6%, not dropped. That’s just math. Meanwhile, a bunch of economists are pointing to Trump’s tariff policy as the reason confidence is falling apart. Companies are holding back. Consumers are scared prices will jump again. And job growth is slowing because nobody wants to take risks under unclear trade rules. Trump’s way of dealing with the mess is to deny it. But that’s not new. Back when the market was flying in 2023 and early 2024—under Joe Biden—Trump was already taking credit. On January 29, 2024, he wrote: “THIS IS THE TRUMP STOCK MARKET BECAUSE MY POLLS AGAINST BIDEN ARE SO GOOD THAT INVESTORS ARE PROJECTING THAT I WILL WIN.” Now he’s president again. The market’s falling. The economy is shrinking. Inflation’s running hot. But somehow, it’s still Biden’s fault. Trump wants credit when things look good. He disappears from the blame list when things look bad. Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot

Source: Cryptopolitan