Soft Inflation Keeps Fed on Track for Possible Rate Cut
A delayed September report showed core PCE inflation rising 0.2% for the month and 2.8% year over year, slightly below expectations and reinforcing the case for a Federal Reserve rate cut. Headline PCE also rose 0.3% monthly with annual inflation at 2.8%, while goods and energy prices saw sharper increases due to ongoing tariffs. Personal income grew 0.4% and spending 0.3%, and the savings rate held steady at 4.7%. Markets responded positively as traders maintained strong expectations for a December rate cut, though Fed officials remain divided on next steps amid mixed labor market signals and improving consumer sentiment.
Small Businesses Drive Sharp November Job Losses
Private payrolls fell by 32,000 in November, far worse than expected, as small businesses shed 120,000 jobs and drove the first significant decline since early 2023. Larger companies continued to add workers, but broad-based weakness—especially in professional services, information, and manufacturing pulled overall employment lower. Wage growth also cooled, with job stayers seeing a slower 4.4% annual pay increase. With the ADP report serving as the Fed’s final labor snapshot before its December meeting, markets still expect another rate cut even as policymakers remain divided over balancing labor softness against inflation risks.
Costco Sues to Recover Tariffs as Supreme Court Weighs Trump’s Authority
Costco filed a lawsuit seeking a full refund of tariffs it has paid under the Trump administration’s emergency-based duties and asking the court to halt further collections while the Supreme Court reviews the tariffs’ legality. The company argues it may lose the right to recover those payments after a looming Dec.15 liquidation deadline, even if the Supreme Court ultimately rules the tariffs unlawful. Lower courts have already found that Trump lacked authority under the International Emergency Economic Powers Act to impose the duties, and several justices appeared skeptical of the administration’s defense during recent arguments. Costco’s suit mirrors dozens of similar filings by importers worried they could forfeit refunds unless they secure individual legal judgments ahead of the Court’s final decision.
As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.
