PCE v. CORE PCE
Before focusing on Core PCE (Personal Consumption Expenditures price index), let’s walk back to PCE.
The PCE essentially measures what people are buying and how much they are paying for what they are buying. Using varied sources of data from trade and retail organizations and governmental agencies, the Bureau of Economic Analysis calculates the PCE, showing spending trends in durable goods, non-durable goods, and services.
Core PCE is a preferred measure of inflation used by the Federal Reserve. Core PCE excludes the prices of food and fuel, which are subject to more volatile swings in prices. Core PCE can signal an increase or a decrease in inflation and, based on trends, can signal the rate at which inflation is moving. The Federal Reserve’s annual target for inflation is 2%.
MAKING SENSE OF CORE PCE: Why it matters
Inflation, relative to the Fed’s target of a 2% annual inflation rate, can forecast moves of Federal Reserve’s federal funding rates--albeit, an inexact forecast. With Core PCE remaining above its target, it is likely that rate cuts would not occur until later in the year. With optimistic expectations of reduced rates based on trends going back to the summer of 2022, buyers may hold off on deals until more favorable rates lower the cost of investment.
OUR APPROACH REMAINS THE SAME
Despite a slow real estate market, Evergreen maintains its approach in searching for prudent and profitable deals. We refuse to make deals for the sake of making deals. We continue to thoroughly analyze deals, looking for opportunities for profitable investments.
