US Inflation Pressures Lower Than Other Developed Economies

Contrary to what market intuition suggests, Goldman Sachs' latest report reveals that despite higher headline core inflation in the United States, the country's underlying domestically generated inflation pressures are actually lower than in other major developed economies. According to economist Megan Peters, the elevated readings can be attributed to two U.S.-specific transitory factors: tariff effects and AI-related statistical distortions.

The report estimates that current tariffs are boosting core PCE goods inflation by approximately 2.4 percentage points, an effect expected to largely fade by the second half of next year. Additionally, AI-driven memory price increases have been overstated in PCE statistics due to measurement issues, contributing about 1 percentage point to core goods inflation.

When examining non-housing services inflation, official data show U.S. PCE readings above most developed economies, but Goldman argues that this apparent gap also stems from statistical methodology distortions. After harmonizing cross-country methodologies for categories such as healthcare and financial services, the report finds that U.S. core services inflation is actually lower than in other major developed economies.