Summary
In September 2024, the U.S. Department of Commerce reported that the personal consumption expenditures (PCE) price index rose by just 2.1% compared to the previous year, marking the lowest level since early 2021. This figure is slightly above the Federal Reserve’s target inflation rate of 2% and indicates a significant easing of inflation pressures that had previously surged post-pandemic.
The decline in the PCE inflation rate reflects a broader trend of decreasing inflation levels in the U.S. economy, which peaked at 9.1% in June 2022. The Federal Reserve’s aggressive monetary policy, including multiple interest rate hikes followed by a recent rate cut, has been aimed at controlling inflation while attempting to maintain economic growth. As consumer spending remains robust, contributing to a 2.8% annual growth rate in the third quarter of 2024, the Fed’s strategy appears to be yielding results. However, core inflation, which excludes volatile food and energy prices, remains higher at 2.7%, suggesting that while overall inflation is stabilizing, underlying price pressures persist.
Economic Context
The PCE index is a key measure that the Federal Reserve monitors to gauge inflation trends. In recent months, inflation has shown signs of moderation, with the Fed’s actions aimed at achieving a “soft landing” for the economy—balancing growth while curbing inflation. Despite the positive inflation news, challenges remain, such as elevated core inflation and the impact of high interest rates on consumer borrowing and spending.
Future Projections
Economists anticipate that the Fed may continue to cut interest rates in the upcoming months, which could further influence borrowing costs and consumer spending. The central bank’s ability to navigate these economic challenges will be crucial as the 2024 presidential election approaches, with inflation likely to remain a pivotal issue for voters.
Fed's Key Inflation Metric Falls to Lowest Level Since 2021
Oct. 31 / Newsweek / Reports on the recent decline in the PCE price index, aligning with the broader economic context. Highlights the Fed's rate cuts and their implications for consumer borrowing, providing a thorough assessment of inflation trends. “ A key inflation metric that the Federal Reserve closely watches has fallen to its lowest level since early 2021. On Thursday, the U.S. Department of Commerce...
Inflation gauge closely watched by the Fed falls to lowest level since early 2021
Oct. 31 / The Hill / Highlights the significant drop in the PCE price index to 2.1%, emphasizing its implications for inflation and consumer sentiment as the presidential race heats up. Offers a timely overview of economic conditions. “ WASHINGTON (AP) — As a presidential race profoundly shaped by Americans' frustration with high prices nears its end, the government said Thursday that an...
U.S. economy grew at a solid 2.8% pace last quarter on strength of consumer spending
Oct. 30 / Staten Island Ny Local News / Covers GDP growth driven by consumer spending, highlighting resilience in the economy. Offers a balanced perspective on growth and inflation, making it relevant for understanding economic dynamics ahead of the election. “ WASHINGTON — The U.S. economy grew at a healthy 2.8% annual rate from July through September, with consumers helping drive growth despite the weight of...
US Job Openings Drop to Lowest Level in 3.5 Years
Oct. 29 / Newsweek / Reports on a notable drop in job openings, presenting a nuanced view of the labor market. Balances concerns about economic momentum with insights into consumer behavior and Fed policy, making it informative. “ The number of U.S. job openings fell last month to the lowest level in roughly three-and-a-half years, a new report from the U.S. Labor Department showed....
U.S. Economy Grew At Healthy 2.8% Pace Last Quarter On Strength Of Consumer Spending
Oct. 30 / Huffpost / Echoes the insights of the previous article on GDP growth while reiterating consumer spending's role. Provides a comprehensive backdrop to the economic narrative, emphasizing the importance of consumer confidence. “ WASHINGTON (AP) — The U.S. economy grew at a healthy 2.8% annual rate from July through September, with consumers helping drive growth despite the weight of...
Oct. 12 / Dailycaller / Examines the cumulative effect of inflation on everyday costs since 2020, providing specific examples that resonate with consumers. The article's tone captures the frustration felt by many voters ahead of the election. “ High inflation during President Joe Biden’s term will result in voters paying significantly higher prices as they cast their ballots in the 2024 election....
Over 800,000 Fewer Native-Born Americans Are Employed Than Last Year
Oct. 5 / Dailycaller / Focuses on employment disparities, revealing a troubling trend for native-born Americans amid a recovering economy. Provides a critical perspective on job growth that contrasts with the broader inflation narrative. “ More than 800,000 fewer native-born Americans are employed than last year as job gains among Americans continue to lag behind those of foreign-born workers,...
Top Fed official warns jumbo rate cut is declaring victory over inflation too soon
Sep. 20 / New York Post / Presents a dissenting view from a Fed official regarding aggressive rate cuts, adding depth to the discussion on monetary policy. Raises important questions about the sustainability of current inflation trends. “ A top Federal Reserve official warned Friday that the central bank risks prematurely declaring victory over inflation with its vote for a jumbo interest rate...
Harvard's Jason Furman on the Fed's interest rate decision, Harris vs. Trump's economic policies
Sep. 20 / Cnbc / Features an expert discussion on the Fed's interest rate decisions, linking economic policies to the upcoming election. Offers a well-rounded analysis of competing economic agendas, enriching the debate. “ Jason Furman, Harvard Kennedy School professor and former CEA chair, joins 'Squawk Box' to discuss the Fed's inflation fight, what was behind the central...