Inflation Steady, Consumers Strong
Core inflation held steady in August, with the Fed’s preferred gauge showing prices rising 2.9% year-over-year, in line with expectations. Headline Personal Consumption Expenditure (PCE) inflation ticked up to 2.7% as both income and spending exceeded forecasts, reflecting resilient consumer demand. Markets expect the Fed to stay on track for two more rate cuts this year, with futures showing strong bets for an October move. Stocks rose and Treasury yields dipped after the report, while tariff impacts on prices continued to appear limited.
Jobless Claims Drop, Economy Shows Resilience
Weekly jobless claims fell to 218,000, signaling continued labor market strength despite slower hiring and fewer job openings. GDP growth for Q2 was revised sharply higher to 3.8%, driven by stronger consumer spending. Durable goods orders and housing data also came in better than forecast. Markets continue to expect two more rate cuts this year.
Shutdown Looms as Funding Deadline Nears
Congress remains gridlocked as Republicans push for a clean funding extension while Democrats demand health-care provisions. If no deal is reached, hundreds of thousands of federal employees could be furloughed, national parks and services shuttered, and contractors left without pay. Past shutdowns have shown broad disruptions across government functions and delays in critical economic data.
