Pre-market futures, following Micron’s MU epic fiscal Q3 earnings, are all in the green — led by the Nasdaq’s +700 points at this hour. The blue-chip Dow is showing gains of +130 points, the S&P 500 +60 and the small-cap Russell 2000 is +14 points presently.
We also preside over a massive amount of economic data this morning, most of which is non-troubling overall. Let’s start with the preferred gauge of inflation for the Federal Reserve, or at least its leadership from the previous leadership.
PCE Hits 3-Year High: +4.1%
Personal Consumption Expenditures (PCE) for May came in mostly as expected this morning, which is to say mostly higher — tracking increased inflation, even when stripping out higher gasoline prices at the pump. Headline PCE month over month actually came in 10 basis points (bps) below expectations at +0.4%, matching the unrevised prior month. Core PCE for the month rose +0.3%, in-line with estimates and matching the upwardly revised April tally.
Year-over-year PCE is typically where the action is, and here we see the headline number at +4.1% — the highest since April of 2023, though reaching what analysts had been expecting. This is a 30 bps climb from the previous month, and the third-straight month jumping out of its prior longer-term range between +2.2% and +2.8%. (Keep in mind the Jerome Powell-led Fed consistently aimed for +2.0% inflation.) Core PCE year over year is the highest level since October of 2023 at +3.4%, up 10 bps month over month.
Personal Income last month jumped to +0.7% from a 0.0% figure for April — the second-straight rotation from flat payrolls to blossoming higher going back to February. The +0.7% figure is the loftiest since July of 2025. Personal Spending also reached +0.7%, up 10 bps from estimates and +20 bps month over month. Real Spending, adjusted for inflation, was reduced to +0.3%. Long story short here: the consumer continues to earn (spottily) and continues to spend.
Q1 GDP Revised a Half-Point Higher
The second and final revision to Q1 Gross Domestic Product (GDP) surprisingly jumped +0.5% to +2.1% from the first revision a month ago. Meanwhile, Consumption dropped nearly 100 bps from the previous read to +0.5%, the weakest number since Q1 2022. GDP Price Index for Q1 winds up at +3.6%, a 10 bps bump from the prior print, while core GDP in the quarter reaches +4.4%.
Weekly Jobless Claims Remain in Range
Thursday morning almost always brings us Weekly Jobless Claims, and results have typically stayed manageable and historically strong: 215K on Initial Jobless Claims is the first print below 220K in a month, and follows a slightly upwardly revised 227K the previous week. Continuing Claims mark the second consecutive 1.8M figure at 1.821 million. Both long- and short-term jobless claims remain in a range historically consistent with a healthy labor market.
Durable Goods Go Negative, As Expected
Finally this morning, May Durable Goods Orders dropped to -4.5% from an upwardly revised +8.5% reported for April. This is a half-point below where analysts has projected, and is the weakest result since June of 2024. However, we can see something of a mean reversion when we strip out Transportation (aka “aircraft”) costs: +1.3%, up from +1.1% the prior month, which is the strongest figure since June of 2023.
Non-Defense, ex-aircraft— a proxy for typical monthly capital spending — came in at +1.6%, higher than projected and the best monthly tally since March. This, aligned with Personal Spending from the PCE figures, demonstrates we’re seeing healthy enterprise spending as of last month, as well. Shipments shrank a tad month over month — +0.3% from +0.5% previously.
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