Goldman Sachs believes that "US inflation is overestimated," mainly due to "temporary tariffs" and "AI statistical bias."

Goldman Sachs recently pointed out that although core inflation in the United States appears to be higher than that of most economies globally, a deeper analysis of the inflation basket reveals that the United States is actually facing lower inflationary pressures than other countries, and current data is largely distorted by temporary factors.

According to the Trends Trading Platform, Goldman Sachs pointed out in its global economic analysis report released on September 22 that the entire excess of the high inflation of core commodities in the United States can be explained by two temporary factors unique to the United States: tariff increases and AI-related statistical biases.

Goldman Sachs economists estimate that tariffs are currently raising the year-on-year inflation rate of core PCE goods by about 2.4 percentage points, but this effect is expected to largely subside in the second half of next year. Meanwhile, the rise in AI-driven memory prices has been overstated due to PCE statistical issues, currently contributing about 1 percentage point to core goods inflation, and is expected to gradually subside by 2027.

This analysis provides a direct reference for the market to judge the Federal Reserve's policy path. The report concludes that, after removing the aforementioned temporary disturbances, the endogenous inflationary pressure in the United States is actually weaker than in other major developed economies, while the stickiness of inflation in the service sector is more prominent in non-US economies, posing a more persistent policy challenge.

Tariffs and AI statistical biases drive up US goods inflation.

The report points out that core commodity inflation in emerging markets and non-US developed economies has largely returned to pre-pandemic trends, but it is still about 3 percentage points higher than pre-pandemic trends under the US PCE metric and about 1 percentage point higher under the CPI metric.

The report attributes this bias entirely to two temporary factors. First, the tariff effect: Goldman Sachs' US economists estimate that current tariffs have increased core PCE goods inflation by 2.4 percentage points year-on-year, but this effect is expected to diminish significantly in the second half of next year as the tariff impact gradually dissipates. Second, AI statistical bias: The "software and accessories" category has a large weight in the PCE statistics, partially capturing companies' purchasing behavior in retail channels, leading to the overreflection of the sharp rise in memory prices earlier this year in consumer inflation data.

Furthermore, this category has not been quality-adjusted and fails to reflect the actual performance improvements brought by AI tools. Currently, this category contributes approximately 1 percentage point to the year-on-year inflation of core goods, while in other developed economies, the contribution of rising memory prices to core goods inflation is less than 0.1 percentage points.

Goldman Sachs expects the aforementioned AI statistical bias to gradually diminish by 2027, as its equity strategists judge that there is limited room for further upside in memory prices, and the Bureau of Economic Analysis (BEA) will adjust the weighting of software and accessories in the PCE basket at the end of this month.

Service Sector Inflation: Statistical Differences Mask the US's Relative Advantage

Regarding non-housing services inflation, official data shows that the US PCE reading is higher than that of most developed economies, but Goldman Sachs believes that this comparison is statistically distorted.

The report, after standardizing cross-border data for categories such as healthcare and financial services, found that core service inflation in the United States is actually lower than in other major developed economies. Goldman Sachs points out that the PCE treats financial service prices significantly differently from other countries and is highly sensitive to stock market fluctuations; the statistical methods for health insurance also differ from those of other countries. After removing these factors, US non-housing service inflation appears even more moderate.

A more crucial leading indicator is the growth rate of unit labor costs (ULC). The report shows that the ULC growth rate in the US is currently close to the pre-pandemic average, while it is significantly higher in other economies. Goldman Sachs believes that since labor costs are the core driver of medium-term non-housing services inflation, this pattern implies that economies outside the US face greater sustained inflationary pressures.

Housing inflation: Normalized in the US, but still under pressure in non-US developed economies.

Regarding housing inflation, rental inflation in the United States and emerging markets has largely returned to normal levels, but other developed economies are still significantly higher than the long-term trend.

Goldman Sachs attributes this divergence in part to differences in immigration policies. The report shows that in economies where net immigration inflows have declined significantly (such as the United States, Canada, and New Zealand), the improvement in rent inflation has been more pronounced; while in developed economies where the decline in immigration has been relatively limited, rent inflation has progressed slowly since 2023.

In addition, market rental data (which is not included in official inflation statistics but provides the most timely signals of rental trends) shows that the outlook for rental inflation in the United States is more optimistic than in other developed economies, further supporting the judgment that housing inflation will continue to decline.

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The above content is from Zhuifeng Trading Platform .

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