Inflation Moderates While Incomes and Jobless Claims Increase
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The primary Fed inflation rate, the core PCE price index, rose 0.4% in January, matching forecasts. The 12-month core inflation rate eased to 2.8%.
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Prices for core nonhousing services, including health care and hospitality, rose 0.6% in January, after more moderate recent gains. The 12-month rate picked up to 3.45%.
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Personal income surged 1% in January, way above forecasts, helped by a cost-of-living increase in Social Security checks and a dividend income jump.
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Jobless claims rose to 215,000 last week, up from 202,000, slightly worse than expected. Some economists expect claims to rise significantly in coming months.
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Market pricing showed 21% odds of a Fed rate cut by May, but 66% odds of a cut by mid-June. Markets are pricing in 3 quarter-point rate cuts this year as more likely than 4 cuts.