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PCE Inflation Shows Elevated Prices, AI Spending Boom Continues
The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s favored inflation measure, indicated that headline PCE increased by 0.2% in July and 2.6% year-on-year, aligning with forecasts. Core PCE, which excludes food and energy, rose 0.3% month-over-month, while the annual increase was at 2.9%, the highest since February. Market expectations for a 25-basis point rate cut in September now stand at 87.1%.
Amidst these economic conditions, Nvidia’s CEO Jensen Huang highlighted an ongoing AI capital expenditure boom, projecting up to $4 trillion in AI infrastructure spending by 2030. On the corporate front, Google announced a $9 billion investment in Virginia to enhance cloud and AI services while simultaneously cutting more than one-third of its managers to become more efficient.
Recent research from Stanford University indicates that the adoption of AI technology is significantly affecting entry-level job prospects, with a reported 13% employment decline for workers aged 22 to 25 in AI-exposed fields since 2022. As AI and robotics advance, speculation continues about their potential impact on the workforce and economy.
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