PCE Price Index Update: The Core Measure Remains Well Below The Fed Tar
Doug Short | Sep 01, 2013 02:34AM ET
The August available here .
Note on the 2013 Comprehensive Revisions
The chart below shows the size of the monthly revisions to Core PCE price index since 1985. It is calculated as the difference between the pre-and post-revision series. Specifically I subtracted the pre-revision YoY percent change from the post-revision YoY. Recessions are highlighted in gray.
One obvious result of the revisions is that they are modestly Fed friendly. They add approximately 20 basis points to recent Core PCE, which lessens the gap between the current Core PCE and the Fed's target range.
A more dramatic impact of the revisions is the much different interpretation it gives to the historical Core PCE YoY low. Before the revisions, Core PCE hit its all-time low of 1.05% in April, followed by 1.06% in May. Those two months have now been revised upward to 1.24% and 1.21%, respectively. The historic low is now pinpointed in December 2010 at 0.95%.
I'll close this brief note on the revisions with an overlay of the pre- and post- Core PCE since 2009.
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