The inflation indicator favored by the Federal Reserve, PCE inflation, met expectations, but the savings rate further declined

The U.S. PCE (Personal Consumption Expenditures) data released on January 22nd largely met expectations, which is reflected not only in inflation indicators but also in actual nominal consumption levels. The only exception is that monthly income growth was slightly below expectations, leading to a decline in the personal savings rate. Currently, the savings rate stands at 3.5%, the lowest level since October 2022—at that time, public dissatisfaction with inflation was at its peak. This does not necessarily mean that consumer spending will immediately shrink, but as a general principle: when we eventually face a tightening of consumption, the lower the prior savings rate, the more intense and jarring the impact of that tightening will be