LOGIN BY Associated Press Listen to this ArticleMore info 0:00 / 0:00 The Federal Reserve's favored inflation gauge accelerated slightly in August from a year earlier. The Commerce Department reported Friday that its personal consumption expenditures (PCE) price index was up 2.7% in August from a year earlier, a tick higher from a 2.6% year-over-year increase in July and the most since February. Prices rose 0.3% from July, compared to a 0.2% increase the month before. Core prices rose 0.2%, the same as ...

Core Insights - Consumer sentiment declined by approximately 5% in September compared to August, primarily due to concerns about the job market and persistent inflation, although investors with large stock portfolios remained optimistic [2][6]. Consumer Sentiment Index - The University of Michigan's Consumer Sentiment Index fell to 55.1 in September, which is 21% lower than the same month last year, but still above the levels of around 52 recorded in April and May [4][6]. - The decline in sentiment is attributed to rising worries about unemployment, with 65% of respondents expecting job losses, a significant increase from 35% a year ago [5]. Economic Outlook - The sentiment survey indicates a deteriorating financial outlook for consumers, as highlighted by Survey Director Joanne Hsu [5]. - Despite the decline in sentiment, consumer spending remained resilient in August, as indicated by the Personal Consumption Expenditures report [8]. Inflation and Income Growth - Inflation expectations slightly softened, yet 44% of respondents reported that high prices were eroding their personal savings, the highest level since last November [7]. - Slower income growth, combined with high prices, is expected to restrain consumer spending moving forward [8].

But is the data reflecting the inflationary impact of tariffs. Let's discuss with Joe Leavourne, counselor to Treasury Secretary uh Bessant and here on set with me. It's great to see you, Joe. >> Great to be here.Thank you. >> All right, so inflation data that we got this morning. Core PCE basically in line with the month prior and actually we saw the month before that revised lower as well.What is that telling us. >> Actually, I like to look at the goods piece because that's where the tariffs would show up ...

🇺🇸 UPDATE: US consumer spending rose 0.4% in August despite core inflation holding at 2.9%. https://t.co/32F3nQde0S ...

Core Insights - Inflation has increased for the fourth consecutive month in August, complicating the Federal Reserve's interest-rate decision-making process as economic growth remains strong while the labor market shows signs of weakness [1][2] Economic Indicators - Consumer spending rose by 0.6% in August, surpassing July's growth of 0.4%, indicating that households continue to spend despite persistent inflation [2]

Core Inflation and Consumer Spending - The PCE price index increased by 2.7% in August year-over-year, up from 2.6% in July, marking the highest increase since February [1] - Core PCE inflation, excluding food and energy, remained at a 2.9% increase from August 2024, consistent with July's figures [2] - Inflation-adjusted consumer spending rose by 0.4% from July, driven by a 0.7% increase in goods spending, while services spending only increased by 0.2% [3] Federal Reserve Actions and Economic Context - The Federal Reserve has raised its benchmark interest rate 11 times in 2022 and 2023 due to rising inflation, which remains above the 2% target [4] - Recently, the Fed reduced rates for the first time this year to support a weakening job market, while being cautious about further cuts due to potential impacts from tariffs [4] - The Fed prefers the PCE inflation gauge over the consumer price index as it accounts for changes in consumer shopping behavior during inflationary periods [6]

Core Insights - U.S. consumer spending increased by 0.6% in August, surpassing expectations and indicating economic resilience as households engaged in leisure activities [4][6] - The economy has retained momentum from the previous quarter, supported by low layoffs and strong business demand for equipment, suggesting limited likelihood of interest rate cuts by the Federal Reserve [2][4] - Job growth has stagnated due to trade policy uncertainty and immigration restrictions, impacting the labor market [3] Consumer Spending Details - Consumer spending, which constitutes over two-thirds of economic activity, rose 0.6% in August following a 0.5% increase in July, exceeding the forecast of 0.5% [4][6] - Spending on services, including transportation, dining, and recreation, increased by 0.5%, while goods outlays surged by 0.8% [5][6] - High-income households are driving consumption, supported by a robust stock market and elevated home prices, with household wealth reaching a record $176.3 trillion in Q2 [7] Economic Indicators - The report indicates stronger income growth in 2024 and some months of the current year, attributed to rising equities and housing prices, benefiting higher-income households [8]

Core Insights - The U.S. economy expanded at a surprising 3.8% from April to June, significantly higher than the previous estimate of 3.3% [3][5] - Consumer spending rose at a 2.5% pace, up from 0.6% in the first quarter, indicating stronger consumer resilience amid trade uncertainties [5][6] - A notable decline in imports at a 29.3% pace contributed over 5 percentage points to the second-quarter growth, reversing the trend from the first quarter [4][5] Economic Performance - The U.S. GDP rebounded from a 0.6% drop in the first quarter, which was the first decline in three years, primarily due to increased imports [3][4] - The underlying strength of the economy, measured by a specific GDP category, grew by 2.9% from April to June, up from 1.9% in the first quarter [6][7] - Private investment fell, including a 5.1% drop in residential investment, and federal government spending also decreased at a 5.3% annual pace [7][12] Labor Market - Job creation has slowed significantly, with an average of 53,000 new jobs added per month since March, down from an average of 147,000 previously reported [12][13] - The Labor Department is expected to report a modest addition of 43,000 jobs in September, with unemployment likely remaining at 4.3% [14][15] Federal Reserve Actions - The Federal Reserve cut its benchmark interest rate for the first time since December, with expectations of two more cuts this year, although strong GDP growth may influence their decision [15][16] - The Fed will closely monitor the upcoming personal consumption expenditures (PCE) price index for inflation trends [15]

Consumer Behavior - Chinese shoppers are prioritizing leisure spending over luxury designer brands [1]

Core Insights - The gross domestic product (GDP) grew at a 3.8% annual rate for the period from April to June, an increase from the previous estimate of 3.3% due to higher consumer spending [1] Economic Performance - The upward revision in GDP growth indicates a stronger economic performance than initially anticipated, reflecting robust consumer spending trends [1]