In a welcome sign for the U.S. economy, the Federal Reserve's preferred measure of underlying inflation, the core personal consumption expenditures (PCE) price index, slowed down last month. However, at the same time, consumer spending rebounded, surpassing all estimates.

According to data released on Friday, the core PCE price index, which excludes volatile food and energy components, rose by 0.3% compared to the previous month. This comes after a robust 0.5% increase in January, making it the largest back-to-back gain seen in the last year.

While the slight cooling of core inflation may ease concerns about price pressures, the rise in consumer spending highlights the resilience of the U.S. economy. An important factor contributing to this rebound is strong wage growth, which has provided consumers with more disposable income to spend.

The core PCE price index is the Federal Reserve's preferred measure of inflation as it is considered to be a more stable depiction of underlying price trends. The central bank closely monitors this index as it helps guide their monetary policy decisions.

While the overall increase in consumer spending is encouraging, it remains to be seen how sustainable this rebound will be. Factors such as the ongoing Covid-19 pandemic and variations in employment levels could impact household spending going forward.

Overall, the cooling of core inflation and the rebound in consumer spending demonstrate a mixed outlook for the U.S. economy. The Federal Reserve will likely continue to closely monitor these indicators as they navigate through the complex task of maintaining price stability and supporting economic growth in the months ahead.