The December personal income and spending report contains a number of interesting stories, but the obvious headline is that the US economy has been able to return inflation towards target in an environment of vigorous consumer spending growth. Something that is even more remarkable after a significant supply shock and during a period of ultra-low unemployment. There were no real surprises on the inflation front with the core personal consumer expenditure deflator (the Fed’s favoured measure of inflation) coming in at 0.2% month-on-month, but the year-on-year rate is 2.9% rather than 3% – yesterday's GDP report ... (full story)