Goldman Sachs: Upcoming BEA Methodological Changes Will Likely Lower Measured Core PCE Inflation
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs expects the Bureau of Economic Analysis (BEA) to implement three methodological changes in its September 30, 2026 annual national accounts update, which are typically applied retroactively. The net effect will likely lower measured core PCE inflation, reflecting improved statistical measurement of specific components rather than actual price declines.
First, computer software and accessories will shift from a single narrow CPI source to a composite price index incorporating the PPI for data processing services, the PPI for video game software, and CPI for software accessories. Goldman estimates this would lower May core PCE year-over-year by 0.05–0.1 percentage points and December by 0.1–0.2 percentage points.
Second, portfolio management services will derive prices indirectly from the difference between nominal expenditure and real service value estimated using labor survey data. This change could reduce May and December core PCE year-over-year each by approximately 0.1–0.2 percentage points.
Third, legal services will replace CPI with a more granular PPI measure, modestly raising core PCE by roughly 0.04 percentage points in May, though the low weight limits the offsetting impact.
Combined, Goldman projects the May core PCE year-over-year will be revised down 0.2 percentage points to 3.2%. Incorporating these changes, the December 2026 core PCE forecast declines from 3.2% to 3.0%, with December 2027 at 2.2%. Core CPI remains unaffected by these methodological adjustments, leaving the Federal Reserve's preferred inflation gauge mechanically lower without a corresponding shift in CPI readings.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
