US Focus: PCE deflator methodology changes

Research evidence excerpt

US Focus: PCE deflator methodology changes

Abiel Reinhart (1-617) 712 9122 North America Economic Research J P M O R G A N

abiel.reinhart@jpmchase.com US Focus: PCE deflator

JPMorgan Chase Bank NA methodology changes

29 June 2026

Figure 3: PCE deflator for computer software and accessorires Increased valuations and fee rates would still raise inflation,

%oya just as they do now, but so would portfolio inflows and faster

Estimate of new measure

15 industry productivity growth. Concerns that faster asset price

10 appreciation is driving inflation, as expressed for example by

former Fed Governor Miran last December, would remain.

Miran argued that higher fees collected in response to higher

0 valuations should be regarded not as inflation but as an

-5 increase in real consumption, though he also acknowledged

-10 there may be reasons to do it this way for national accounting

Current measure

-15 purposes. Of course, the Fed’s 2% inflation target and choice

15 17 19 21 23 25 27 of PCE measure is something that the institution itself has

Source: BEA, J.P. Morgan defined, and it has broad flexibility in how it sets policy in

pursuit of that mandate, including by considering trends in

Portfolio management and investment advice: This index PCE inflation excluding imputed categories.

currently uses a fixed-weight average of the PPI for portfolio

management and the PPI for investment advice. The PPI for One final technical point is around how inflation will be cal-

portfolio management treats changes in fees collected due culated for months when industry revenue data is not yet

purely to asset revaluation as inflation. For example, if an available from the Quarterly Services Survey. At present this

asset manager charges a management fee that is a fixed per- includes April and May.