Important days ahead. A bit of economy basics for this week, 23th February and 24th. GDP, 4th Quarter and Year 2022 review and PCE January.

GDP

Real gross domestic product (GDP) increased at an annual rate of 2.9 percent in the fourth quarter of 2022 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent.

This will be reviewed tomorrow we will have a more accurate value.

PCE

https://www.investopedia.com/terms/p/pce.asp

Key points:

• Personal consumption expenditures (PCE) is a measure of consumer spending.
• PCE is constructed and reported by the Bureau of Economic Analysis, along with personal income and the PCE Price Index (PCEPI) in the Personal Income and Outlays report.
• PCE includes how much is spent on goods (durable and non-durable) and services.
• The PCEPI is the method used by the Federal Reserve to measure inflation.
• The PCE figures can affect decisions about business offerings, hiring, and investments.

What Is the Importance of the Personal Consumption Expenditures Number?

The personal consumption expenditures number shows how Americans collectively spend their money. Tracked from month to month, it is an indicator of the health of the economy overall. It also is a key component of the PCE Price Index, which tracks inflation or deflation in consumer prices over time.

Specifically, the categories represented in PCE data include the following:

• Durable goods: motor vehicles and parts, furnishings and durable household equipment, recreational goods and vehicles, and other durable goods.
• Nondurable goods: food and beverages purchased for off-premises consumption, clothing and footwear, gasoline and other energy goods, and other nondurable goods.
• Services: housing and utilities, health care, transportation services, recreation services, food services and accommodations, financial services and insurance, and other services.

Fed Preference for the PCE Price Index

In 2012, the PCE Price Index became the primary inflation index used by the U.S. Federal Reserve when making monetary policy decisions. The Fed prefers the PCEPI over the comparable Consumer Price Index (CPI), because, in summary:

• The PCEPI better reflects changes to consumer spending, such as selecting substitute goods due to price changes.
• It covers a broader range of spending.
• Past information can be adjusted to support recent information.6

The PCEPI is also weighted by data acquired through business surveys, which tend to be more reliable than the consumer surveys used by the CPI. Also, PCEPI uses a formula that allows for changes in consumer behaviour and changes that occur in the short term.7

Last review:

The $41.6 billion decrease in current-dollar PCE in December reflected a decrease of $95.0 billion in spending for goods and a $53.4 billion increase in spending for services (table 3). Within goods, decreases were widespread and led by gasoline as well as motor vehicles and parts. Within services, the largest contributors to the increase were spending for housing, transportation (mainly air transportation), and health care. Detailed information on monthly PCE spending can be found on Table 2.3.5U.

So basically, less expenditure in goods that is passing to no durable goods, mainly gasoline and gas.

Good luck this week with your trading and remember be long, be ready!.