Inflation Cools Slightly, Boosting Odds of Fed Rate Cut
Consumer prices rose 0.3% in September, slightly less than expected, bringing annual inflation to 3% and reinforcing expectations for a Federal Reserve rate cut next week. Core inflation, which excludes food and energy, also increased a modest 0.2% for the month. The softer-than-expected report, released despite the government shutdown, fueled gains in stock futures and eased Treasury yields. With inflation pressures appearing contained, markets see the Fed almost certain to trim rates, though the longer-term policy path remains uncertain amid ongoing tariff concerns and a slowing labor market.
Home Sales Hit Seven-Month High as Falling Mortgage Rates Boost Demand
Sales of existing homes rose 1.5% in September to an annualized rate of 4.06 million, the fastest pace in seven months, as easing mortgage rates spurred buyer activity. Inventory climbed 14% from a year earlier but remains below pre-pandemic levels, keeping prices elevated—the median home price rose 2.1% to $415,200. High-end sales led the gains, with transactions above $1 million jumping 20% year over year, while first-time buyers increased their share to 30%. Despite modest improvements in affordability, limited supply continues to constrain the market and push prices higher.
“K-Shaped” Economy Widens as Inflation Eases and Spending Splits by Income
As inflation cools and a Fed rate cut looms, American consumers are showing sharply divided spending patterns. Wealthier households continue to spend on premium goods, travel, and autos, while lower- and middle-income consumers are cutting back on essentials like food and fuel. Major companies such as Coca-Cola, McDonald’s, and Procter & Gamble report rising demand at both high- and low-end outlets but softening activity in the middle. Analysts say this “K-shaped” economy reflects growing economic inequality, though some executives, like Hilton’s CEO, expect the divide to narrow as inflation and rates ease next year.
