Tag Archives: Personal Consumption Expenditures (PCE)

The Trump Presidency And Your Wallet

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On Friday, Breitbart posted an article about the impact of the Trump economy on personal income.

The article reports:

Americans’ personal income in the first four months of 2025 is “almost triple the expectations,” making for a “great” start of the year, CNBC’s Rick Santelli exclaimed on the air, urging viewers to “give credit” to the Trump administration.

The longtime CNBC editor revealed the “powerful” numbers on Friday morning, sharing that personal income increased 0.8 percent in April. 

“This is a great four-month start to any year,” he said.

“When you look at income, for the first four months of the year, they’re powerful numbers — up 0.6 in January, up 0.7 in February, up 0.5 last month, up 0.8 this month. This is a great four-month start to any year.”

Santelli also lauded the fact that 0.8 percent is the “strongest” income month-over-month jump since May 2021, when it was 1.9 percent.

He went on to lament how the Trump administration is “criticized for just about anything under the sun,” despite the president’s “transparency” and positive accomplishments.

The article concludes:

“This administration is criticized for just about anything under the sun. I’ve never ever in my lifetime had glimpses into the politics of an administration in the form of transparency like this one. Why don’t we… give credit where credit is due?”

Part of the reason for the increase in consumer spending power is the lowering of the rate of inflation.

On Friday, The Daily Caller reported:

President Donald Trump achieved an economic victory after a prominent inflation reading dropped to its lowest reading in four years.

The personal consumption expenditures (PCE) index, one of The Federal Reserve’s primary inflation measurement models, showed a decrease in inflation in April 2025 to a level not seen since March 2021, according to a Commerce Department report.

The index, which measures goods and services spending, showed an increase of $47.8 billion, or 0.2%, with major gains in housing and health care the report stated.

In April, the PCE and Core PCE, which measures without noting volatile food and energy prices, both rose by only 0.1% from the previous month, according to the report. The consumer price index also indicated a drop in inflation to a four-year low as well, with a seasonal adjusted 0.2% in April, as reported by the Daily Caller News Foundation earlier this month.

This is the economic relief Americans needed. If Congress would just pass the spending cuts recommended by the Department of Government Efficiency (DOGE), Americans would enjoy more financial freedom.

Unfortunately, Inflation Is Still With Us

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On Thursday, Townhall posted an article about the current inflation levels.

The article reports:

Yet another inflation metric jumped in July, further debunking claims that inflation is in the rear-view mirror and reinforcing Federal Reserve Chairman Jerome Powell’s remarks earlier this month that additional interest rate hikes would be needed.

The latest Personal Consumption Expenditures (PCE) price index print released Thursday was in-line with expectations which were higher than previous reads.

Headline PCE inflation showed an increase of 3.3 percent year-over-year and Core PCE inflation — excluding volatile food and energy prices — increased 4.2 percent in the last year.

Compared to the previous release, headline and core PCE inflation increased 3.0 percent and 4.1 percent, respectively, showing that price increases continue to trend in the wrong, more expensive, direction. The July report also (again) debunks President Joe Biden’s wishful claims that inflation is “down.”

So what do higher interest rates mean for Americans?

Today’s fixed interest rate on a thirty-year mortgage is about 7 percent. If you have an $180,000 mortgage and put 10 percent down, your monthly payment at 7 percent (mortgage only) would be about $1,200. For the same down payment and loan amount, your monthly payment (mortgage only) at 3.5 percent would be about $800 (source here). That’s a difference of almost $5,000 a year. That impacts the housing market as well as the ability of young couples starting out to buy a house.

There is also the matter of payments on the national debt. As the interest rate is raised, those payments also go up.

Raising interest rates may slightly slow down inflation, but it will not solve the problem. Until someone deals with the runaway spending in Washington, we will have inflation. The other thing to note is that as the value of the dollar goes down because of inflation, payments on the national debt are made with money that is worth less than it was when the debt was incurred. The whole thing is a viscous circle where working-class Americans pay the price.