Core-Cast

In 2026, the Fed moved from an easing bias to a hold to a hike, catching up to the data with a lag at every stage. We look back at how (1) a bottoms-up read of inflation, (2) a careful reading of the labor market, and (3) close tracking of the full FOMC put us ahead of the hawkish turn.

Our month-over-month May Core PCE nowcast of 0.40% came in 8 basis points above the realized 0.32% reading. Our error stemmed from Supercore (core services ex-housing) – the realized readings for nowcasts for core goods and housing came right in line with our final nowcasts for

Summary & Discussion Core and Supercore PCE delivered a major downside surprise in the final PCE release for April, but. more than half of the downside surprise was offset by upside revisions to Q1 inflation. The net result was just a 3bp decline in Core PCE year-over-year readings