Overview
- The Bureau of Economic Analysis reported on Wednesday that headline personal consumption expenditures rose 0.3% in August and 3.4% year‑over‑year while core PCE (excluding food and energy) rose 0.2% month‑to‑month and 3.0% year‑over‑year.
- The BEA also revised prior months and changed how it measures prices for items such as software, portfolio management fees and legal services, which lowered some earlier inflation readings and complicates month‑to‑month trend interpretation.
- Financial markets cut the probability of an October Fed hike after the report, lifting U.S. equity futures and pushing traders to price a later move, most likely in December unless incoming data materially shifts the outlook.
- Consumer spending jumped 0.9% in August even as the Conference Board’s consumer confidence index plunged to its weakest level since April 2014, showing households kept spending despite deteriorating sentiment.
- Energy costs driven by the Middle East conflict and hotter readings from some euro area reports such as Spain’s September CPI keep upside inflation risk alive, while sovereign yields at multi‑year highs keep borrowing costs elevated and constrain policy options.