Goldman Sachs Says U.S. Inflation Is Spreading Beyond Fewer Sectors

Goldman Sachs said U.S. inflation pressure is broadening from a handful of industries to a wider range of sectors, even though price growth has not returned to its 2022 peak. According to ChainCatcher, the bank said the expanding breadth of price increases is creating a greater challenge for the Federal Reserve. Goldman economist Jessica Rindels assessed the spread using the Personal Consumption Expenditures price index, measured by six-month annualized changes. Relative to the average inflation environment from 1990 to 2019, the share of inflation categories with pressure above 3% has risen to about 6, compared with 10 at the 2022 peak. The report said audiovisual equipment, financial services, health care, and transportation are among the main sources of current price increases. It also said housing rent inflation, which carries a large weight in PCE, is expected to fall below 3% in the fourth quarter this year and could help ease inflation pressure. Goldman’s analysis echoed recent concerns from Fed Chair Kevin Warsh about inflation spreading more widely through the economy. Warsh said preventing price increases from extending into more sectors is an important task for the Fed, but he has declined to provide specific guidance on the rate path. Norinchukin Securities senior U.S. economist Jeremy Schwartz said the Fed is reducing forward guidance, adding to Wall Street’s policy uncertainty. Dallas Fed President Lorie K. Logan has also signaled support for a modest rate hike, saying current economic resilience does not match inflation risks.