Key Inflation Metric Hits Lowest Point Since 2021 In Final Report Before Election

by · Forbes

Topline

Inflation moderated in September to its lowest level since Feb. 2021, according to one metric released Thursday by the Commerce Department, the final update on the hot-button election issue of inflation before the election, though the report focused on Americans’ spending offered other less encouraging morsels for consumers.

A shopper scans coupons in a grocery store in Washington, D.C., in May.CQ-Roll Call, Inc via Getty Images

Key Facts

Inflation was 2.1% last month, according to the personal consumption expenditures price index, which measures how much more Americans spent this September than in Sept. 2023.

That matches consensus economist estimates of 2.1% headline PCE inflation reading, according to FactSet data, coming in at the lowest level since Feb. 2021’s 1.85% before the global inflation crisis ravaged Americans’ wallets.

But core PCE inflation, which excludes outlays in the more volatile food and energy categories as they are considered less a reflection of economic conditions and more a shift in short-term commodity price changes, was 2.7% last month, higher than estimates of 2.6%.

That makes September the 41st consecutive month of at least 2.5% core PCE inflation, well above the Federal Reserve’s 2% long-term target.

Big Number

4.6%. That was the personal savings rate in September, according to Thursday’s report, which tracks the percentage of Americans’ monthly disposable income remaining after taxes and expenditures. Though that’s an improvement of the 15-year-low of 2% set in 2022 at the height of the inflation bout, the savings rate never dipped below 5% from 2014 to 2021.

Key Background

The slumping savings rate is indicative of the malaise felt by many Americans of their personal finances and the economy broadly despite stock market highs and robust economic growth. The economy is the top issue for voters in the presidential election, according to polls from Gallup, the New York Times and Pew Research. A separate Gallup poll this month found the high cost of living is Americans’ top concern about the economy.

What To Watch For

The last remaining major economic update due before Election Day will be Friday morning’s employment report, which will reveal October’s unemployment rate and labor market growth. Consensus economist forecasts call for an unemployment rate of 4.1%, flat from September, and 110,000 jobs added, the weakest growth since April.

Further Reading