US DATA: December PCE: Core Inflation Looks In Line, But Consumption Upgrade Due

The median analyst expectation for monthly core PCE (Friday 0830ET) following the CPI/PPI/Import Price releases was 0.18% M/M (central range of 0.14-0.21%) - see table below.

• Thursday's Q4 GDP release suggests that those expectations were well-founded: at 2.502% Q/Q annualized, the implied core PCE rate for December is 0.172% M/M (the analyst median is basically split between 0.17% and 0.18%). Headline is seen at 0.27% (0.13% prior). Of course that doesn't account for possible revisions to the prior months, but as it stands there were no major revelations from the quarterly data.
• The GDP readings put the Q4 Y/Y figure at 2.8%, exactly in line with the FOMC's December projections, so this should not affect policymakers' perceptions of price pressures at end-year.
• As for monthly consumption, surveys coming into this week saw December real personal spending at 0.3% M/M (same as December).
• But that figure (which was consistent with the 3.2% Q/Q quarterly consensus for consumption) looks to be higher in reality, given the 4.2% Q/Q quarterly print that we now have in hand.
• It also suggests there will be upside revisions to the softer real consumption figures we saw in Oct (0.1% M/M) and Nov (0.3%). The 3-month annualized figure in November was a "mere" 3.6%, so absent revisions to Oct/Nov, the consumer looks to have ended Q4 with roaring activity, perhaps on the order of 0.6%.
• We'll also look for the breakdown, given that the momentum for services (two-thirds of PCE consumption) appeared to be fading in the monthly prints, but the GDP report showed a different story. In November, services consumption printed a 15-month low growth of 0.07% - suggesting some of the weakest momentum in a year.  But the GDP figures showed a 3-quarter high for real services consumption growth (3.1% Q/Q ann., 2.8% prior), pointing to a strong December and/or upward revisions to prior.