Goldman Says Stocks and AI Spending Keep US Core PCE Elevated

The Federal Reserve targets 2% inflation as measured by the personal consumption expenditures price index. Core PCE, which excludes volatile food and energy costs, is closely watched as a gauge of underlying price pressure. A further overshoot in July would mark the 65th consecutive month above the Fed’s target and could complicate the case for lower interest rates.

Goldman Sachs estimates that roughly half of July’s monthly increase in core PCE came from rising equity markets, which lifted investment-advisory and asset-management fees as portfolio values grew. The artificial-intelligence data-center boom added another source of pressure by raising demand and costs for hardware components and electricity, making technology investment an increasingly important contributor to persistent core consumer inflation.