The Fed’s favorite measure of inflation was released, and we saw it inch up. But once again, diving into the data to try and understand where tariff pressures were showing up and where they were still docile, revealed quite a bit.

For starters, I still love the Trimmed Mean PCE (average inflation) reading from the Dallas Fed. It strips off the highs and lows and averages the middle. This month for instance, eggs were down 60% and household linens were up 90%. The average inflation figure allows us to strip out the highs and lows (because many of those could be simply data anomalies on a specific month) and get to “real” street level inflation. It also incorporates real world inflation that comes through food and energy, if that is applicable in a common month unlike core inflation readings that strip those out. …

Data is coming in just about as volatile as tariff policy these days. The Dallas Federal Reserve monthly survey of manufacturing activity dipped last month, but it rebounded in one of the sharpest recovery periods in nearly four years. It jumped 20 points to 21.3. …

The Watch report is updated monthly, and the latest information that we have available shows some interesting differences between national forecasts on economic growth for 2024 and what the models are showing us. …