The February Personal Income and Outlays report from the U.S. Bureau of Economic Analysis showed that the headline personal consumption expenditures (PCE) price index rose by 2.8% year over year, consistent with expectations and flat from the previous month. Core PCE inflation (excluding food and energy prices) was up at 3.0% year over year as expected, down from January’s 3.1%.
The ABA Office of the Chief Economist believes that the February data shows that inflation was still well above the Federal Reserve’s 2% target even before the current geopolitical conflicts. Higher price growth will keep pressuring margins and weakening overall profitability for both financial services and their clients, as rising costs and macroeconomic uncertainty erode financial performance.
