PCE Inflation, the Fed’s Preferred Measure, Sped Up in November
Published On Dec 20, 2024, 8:40 AM
The latest data on the Personal Consumption Expenditures (PCE) index shows a 2.4% increase from a year earlier, which is higher than the Federal Reserve's target of 2%. Core inflation, stripping out food and fuel, remained stable at 2.8%. This slight uptick in inflation raises concerns for the Federal Reserve as they consider future interest rate cuts. Despite this, consumer spending remains strong as holiday shopping picks up. The Fed has cut interest rates three times this year, but future cuts may happen more slowly due to persistent inflation and a stabilizing job market.
Stock Forecasts
XLY
Positive
The persistent inflation and strong consumer spending indicate a slightly troubled economic environment where investment in consumer-related sectors could face headwinds. However, companies in retail or consumer goods, particularly those that perform well during holiday seasons, may experience growth. Furthermore, ETFs that focus on consumer discretionaries may benefit from continued strong spending during the holidays.
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