The Commerce Department said Thursday that the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, rose 0.4% in February from January and held the annual rate at 2.8%. Excluding food and energy, the core PCE price index also rose 0.4% in February, lifting the annual rate to 3% from 2.9% the month before. The numbers keep inflation above the Fed’s 2% target while households keep paying the bill. **Who Gets Squeezed** Consumer spending rose 0.5% in February, up from a 0.3% increase in January, while personal income fell 0.1%. The savings rate fell to 4% from 4.5% the month before as inflation-adjusted after-tax incomes dropped 0.5% for the month. That is the familiar arrangement: spending continues, but the room to breathe narrows. People are still buying, but they are doing it with less income and less cushion. The report said the figures were in line with Dow Jones consensus and FactSet expectations. CNBC said the core personal consumption expenditures price index rose a seasonally adjusted 3% in February and that the all-items headline inflation measure increased 2.8%, with both readings in line with the Dow Jones consensus. CNBC also said the monthly core and headline prices rose 0.4%, that the Fed uses the PCE price index as its primary yardstick and forecasting tool for inflation, and that the Fed targets 2% inflation. The official machinery gets to define the benchmark, then measure how far the public remains from it. **What the Numbers Say About Power** CNBC reported that the Commerce Department also said economic growth was weaker than previously reported in the fourth quarter of 2025, with gross domestic product rising at an annualized rate of 0.5%, down from 0.7% and from an initial estimate of 1.4%. The full-year growth rate held at 2.1%. The department said the downward revision came primarily from lower investment than previously indicated, and a key metric for demand, real final sales to private domestic purchasers, was cut to a 1.8% growth rate, down 0.6 percentage point from the first estimate. CNBC quoted Sal Guatieri, senior economist at BMO Capital Markets, as saying, "Core prices are actually gaining momentum, up 4.4% annualized the past three months, compared with 3.4% in the past six months … and this is before spillover pressures from the Iran war." Guatieri also said, "Goods prices popped 0.7%, the most in about four years, indicating some lingering tariff effects." The language of momentum and spillover is the language of people trying to track the damage after policy, tariffs, and war have already done their work. CNBC quoted economists at Pantheon Macroeconomics as saying, "The 0.5% fall in real-after tax incomes in February is hard to square with Treasury data pointing to substantial individual tax refunds, but the underlying trend in nominal income growth remains very soft either way." CNBC said tax refunds could bolster incomes in March and April, but the surge in gas prices and other costs could quickly consume those gains. The promise of a refund is not the same as security; it is just another temporary patch on a system that keeps extracting. **What They Call Stability** CNN said Americans kept spending in February, with consumer spending rising 0.5% and inflation remaining stubbornly higher than typical. CNN said the PCE price index climbed 0.4% from January, holding the annual rate at 2.8%, and that the core PCE price index also rose 0.4%, bringing the annual rate to 3% from 2.9% the month before. CNN said the savings rate fell to 4% from 4.5% and real after-tax incomes dropped 0.5% for the month. CNN also said the latest estimate of fourth-quarter 2025 GDP growth was 0.5%, down from 0.7% and much lower than the 1.4% initially reported, and that the revision reflected weaker business investment in a period when the U.S. government was shut down for a record 43 days. CNN said the battery of new economic data and expectations that inflation will climb higher following war-driven energy and supply shocks suggest Federal Reserve policymakers may be less inclined to lower interest rates, and quoted BMO Capital Markets' Sal Guatieri as saying, "With headline inflation likely to test 4% soon, there is little chance the Fed will ease policy in the near term." CNN said the inflation data covered the period before the war the U.S. and Israel launched against Iran and did not reflect the surge in energy prices during the conflict. A more current look at prices would come Friday when the Bureau of Labor Statistics releases the March consumer price index, with consensus estimates of 0.9% monthly headline inflation and 3.3% annual inflation, and core CPI projected at 0.3% monthly and 2.7% annually. The next official reading is already queued up, because the apparatus never stops counting while people keep absorbing the costs.
