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last mo.

Delayed PCE Shows Inflation at 2.8% as Spending Cools, Boosting Odds of Fed Cut

The shutdown delay means next week’s Fed decision will rely on September data.

In September, higher gas prices drove some inflation indexes higher.
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FILE - Black Friday Shoppers wait in line to enter Macy's flagship store on Friday, Nov. 28, 2025. (Photo by Angelina Katsanis/AFP)

Overview

  • BEA data show headline PCE up 0.3% month over month and 2.8% year over year, with core PCE up 0.2% on the month and 2.8% on the year.
  • Consumer spending rose 0.3% in September but was flat after inflation, while personal income increased 0.4%.
  • Markets now largely price a 25-basis-point cut on Dec. 9–10, with CME FedWatch implying roughly 87% odds and stocks edging higher after the release.
  • The report was delayed by a prolonged government shutdown, leaving October–November inflation and the official November jobs figures unavailable until after the meeting.
  • Private indicators point to cooling demand and hiring, including an ADP report showing a 32,000 drop in private payrolls and a small uptick in consumer sentiment to 53.3.