Friday, the Bureau of Economic Analysis reported the August Personal Consumption Expenditures price index rose 0.26% month‑over‑month and 2.7% year‑over‑year, roughly matching economist forecasts and keeping the Fed’s preferred gauge on the path policymakers expected. Personal Consumption Expenditures showed the core measure (excluding food and energy) at 2.9% y/y, a touch below some forecasts for August.
Context: the report arrives after recent data showed mixed labor signals and a sizeable upward revision to spring growth; that combination has kept markets and the FOMC debating timing and size of further rate cuts. The August PCE reading is the clearest near‑term check on whether disinflation is re‑accelerating toward the Fed’s 2% goal.
Why it matters: the core PCE at 2.9% is still above target, but its in‑line print reduces the odds of immediate, larger easing by the Fed — leaving the central bank room to step cautiously. For households, sticky services inflation means everyday bills and shelter costs will likely remain a constraint on real income gains.
State nuance: Thursday’s BEA revision that raised second‑quarter GDP to a final 3.8% annualized rate changes the backdrop for the PCE print — stronger output reduces the mechanical case for faster easing and raises the bar for declaring a durable slowdown. See the BEA’s broader state and GDP release for the drivers behind the estimate. BEA GDP revision.
