Reinhart Week in Review by Madison Investments 3.1.2024

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INFLATION

The Personal Consumption Expenditure deflator (PCE), the Fed’s preferred inflation gauge, rose 0.3% in January. The PCE is up 2.4% from a year ago. Core PCE, excluding food and energy, rose 0.4% and 2.8% respectively over the same periods. The supercore PCE, which also excludes shelter, rose 0.6% in January.

Our Take: The PCE report came in as expected, confirming earlier CPI and PPI reports of stronger inflation in January. Year-end seasonal adjustments are difficult so there is some reason to discount the reports, but the path to 2% inflation was always going to be bumpy. For now, the disinflation story remains intact despite the January reports, but a repeat of strong numbers in February would be cause for concern.

PERSONAL INCOME AND SPENDING

Personal Income rose 1.0% in January while spending rose 0.2%.

Our Take: Bad weather may have affected spending in January, but the better-than-expected rise in incomes is welcomed and should help support the continued strength of the consumer.

MUNICIPALS

The Metropolitan Transportation Authority (MTA) will hold public hearings in New York City beginning this week to discuss its congestion pricing plan. Under the new tolling plan, which is expected to begin in June, commuters driving into the central business district in Manhattan will pay an additional toll during peak hours.

Our Take: The MTA Board voted to approve the various prices for cars, trucks, motorcycles, taxis, and ride-share vehicles late last year. However, many drivers remain opposed to the tolls. Taxi drivers and ride-share drivers have expressed concern that the additional surcharge will reduce demand for their services. The upcoming public hearings may provide additional clarity surrounding the rates and possible exemptions.

About Reinhart Fixed Income
“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

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