US Daily Commentary

Research evidence excerpt

US Daily Commentary

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spending rose modestly. Based on our PCE inflation estimates, we expect real spending

grew at a modest pace of 0.1% m-o-m.

PCEdeflator: Incorporating relevant details from CPI, PPI, and import prices, we expect

core PCE inflation accelerated to 0.376% m-o-m in May (Consensus: 0.3%) from a revised

0.230% in April. With expected backward revisions, our forecast translates into 3.5%

(3.457%) y-o-y core PCE inflation in May (Consensus: 3.4%) from 3.3% in April.

Core CPI inflation moderated and core CPI goods inflation turned negative for the first

time since May 2025. We expect core PCE goods inflation also turned negative in May.

The increase in core PCE inflation was likely driven by components derived from PPI data.

PPI financial service prices rose strongly. In addition, import prices for air passenger fares,

an input into PCE’s price index for passenger fares for foreign travel, jumped sharply and

pushedupourestimateforcorePCEinflation.

GDPQ1thirdestimate: We expect the third estimate of Q1 GDP growth to be 2.1%

(Consensus: 1.6%), five-tenths higher than the second estimate of 1.6%. Annual revisions

to international trade data suggest that the growth of both exports and imports are likely to

be revised down in Q1, but the magnitude of downward revision to imports appears to

outweigh the downward revision to exports. As a result, we expect net exports of GDP for

Q1 will be upwardly revised, which pushes up real GDP growth in the quarter.

Durablegoodsorders: We expect durable goods orders fell 5.2% m-o-m in May

(Consensus: -5.0%) following a sharp increase in April. Nondefense aircraft orders likely

declined sharply, as Boeing net orders fell to 11 in May from 135 in April. Motor vehicles