Overview
- The Fed’s preferred PCE inflation gauge accelerated in the third quarter, intensifying concerns about sticky service-sector price pressures into 2026.
- Corporate profits from current production jumped by roughly $166 billion in Q3, underscoring strong margins despite softer business investment.
- Consumer spending led the surge, with economists saying higher-income households were the primary drivers as wealth effects supported travel, dining and healthcare outlays.
- Labor-market momentum cooled, with unemployment rising to about 4.6% in November and monthly job creation averaging near 51,000 this year.
- Economists point to automation, AI-related investment and tax incentives for capital spending as key reasons growth is outpacing hiring, contributing to a K-shaped expansion.