Core PCE Inflation Slows, Capital Economics Sees a Strong U.S. Economy

Investing.com -- Leading economic research firm Capital Economics announced on Friday that while inflation pressures are starting to ease, the real economy continues to remain strong.

Excluding food and energy, the core Personal Consumption Expenditures (PCE) price index showed a modest month-on-month increase of 0.11% in November, marking the lowest rise in the past six months. This increase followed two consecutive monthly gains of approximately 0.25%, which were above the Federal Reserve's target rate.

The November data reduced the annualized three-month core inflation rate from 2.8% to 2.5%, although the six-month rate showed a slight increase from 2.3% to 2.4%. Despite these changes, the annual inflation rate remained steady at 2.8%. Meanwhile, the overall PCE prices, including food and energy, rose 0.13% month-on-month, leading to a minor recovery in the annual inflation rate from 2.3% to 2.4%.

In terms of consumer spending, real consumption recorded a 0.27% increase in November. Additionally, revised figures from previous months resulted in an upward adjustment of fourth-quarter consumption growth estimates, which are now expected to be around 3.0%, slightly higher than prior forecasts.

Capital Economics also predicts a slight acceleration in fourth-quarter GDP growth from 3.1% in the third quarter to 3.3%.

Overall, the data reflects the ongoing strength of the U.S. economy and more moderate price pressures, which appear to align with the Federal Reserve's targets for the economy.