| | | | | GS Bottom-up Core PCE Model | | | | --- | --- | --- | --- | --- | --- | --- | | | | March 2025 | Dec. 2025 | | | Dec. 2026 | | | Weight | YoY | YoY | Contribution to Change | YoY | Contribution to Change | | Core PCE | 100.0 | 3.0 | 3.8 | 0.8 | 2.7 | -0.3 | | Core Goods | 24.3 | 0.4 | 6.3 | 1.4 | 2.2 | 0.4 | | New Vehicles | 2.2 | -0.4 | 3.7 | 0.1 | 0.4 | 0.0 | | Used Vehicles | 1.1 | -0.1 | 8.3 | 0.1 | 1.5 | 0.0 | | Household Appliances | 0.5 | -3.2 | 7.8 | 0.1 | 0.1 | 0.0 | | Video, Audio, Compu ...

Inflation Data - The core CPI inflation rate in the U.S. fell to 0.06% in March, down 0.17 percentage points from February, significantly below the market expectation of 0.3%[1] - Overall CPI growth turned negative at -0.05% in March, down from 0.22% in February, also below the market expectation of 0.1%[1] - Year-on-year, the overall CPI and core CPI decreased by 0.4 and 0.3 percentage points to 2.4% and 2.8%, respectively[1] Employment Data - Non-farm payrolls increased by 228,000 in March, exceeding market expectations of 140,000 and significantly up from 117,000 in February[2] - The unemployment rate remained stable at 4.15% in March, compared to 4.14% in February[2] Tariff Impact - The weighted average tariff rate in the U.S. increased from 20.5% to 25.9% since Trump's administration, potentially raising inflation by 1.1 to 2.3 percentage points[3] - If the "reciprocal tariff" policy is fully implemented, the inflation impact could rise to 1.4 to 2.7 percentage points[3] Interest Rate Outlook - The forecast remains for 2-3 rate cuts of 25 basis points each throughout the year, although uncertainty due to tariff policies has increased[4] - The Federal Reserve may need to observe the situation before making decisions, as tariffs could push inflation higher[5] Economic Risks - Risks include slow rate cuts leading to recession and the potential for stagflation due to aggressive tariff policies[6]