Investing.com — Capital Economics, a leading economic research firm, on Friday reported that the real economy remains robust as inflation pressures appear to be subsiding.
The core Personal Consumption Expenditures (PCE) price index, which excludes food and energy, saw a modest month-over-month increase of 0.11% in November, marking the smallest rise in the past six months. This followed two consecutive months of approximately 0.25% increases, which were above the Federal Reserve’s target rate.
The November data brought the three-month annualized core inflation rate down to 2.5% from 2.8%, although the six-month rate saw a slight uptick to 2.4% from 2.3%.
Despite these changes, the annual inflation rate held steady at 2.8%. Meanwhile, headline PCE prices, which include food and energy, rose by 0.13% month-over-month, with the annual inflation rate making a slight recovery to 2.4% from 2.3%.
In terms of consumer spending, real consumption saw a 0.27% increase in November. Additionally, revised figures for previous months have led to an upward adjustment in the fourth-quarter consumption growth forecast, now expected to be around 3.0%, a slight increase from earlier predictions.
Capital Economics also anticipates a slight acceleration in fourth-quarter GDP growth to 3.3%, up from 3.1% in the third quarter.
Overall, the data suggests that the U.S. economy is experiencing continued strength, coupled with more muted price pressures, which aligns with the Federal Reserve’s objectives for the economy.
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