Spending Slows as Services Dominate Consumption
Personal consumption expenditures increased 0.3%, driven almost entirely by a $63.0 billion gain in services spending. Goods spending contributed a modest $2.1 billion. In real terms, however, consumption stalled, with real PCE registering 0.0%, a sign that higher prices in previous months had already constrained purchasing power. The stall in real spending marks a notable moderation compared with earlier in the quarter, when consumer outlays had been a primary support for GDP tracking estimates.
The personal saving rate held at 4.7%, with total personal saving measured at $1.09 trillion. While stable, this level continues to reflect consumer caution, particularly as borrowing costs remain elevated and the Fed has yet to signal a definitive policy easing window.
Inflation Indicators Reinforce Fed Patience
Headline PCE increased 0.3% month over month and 2.8% year over year — matching core metrics — suggesting broad disinflation across major categories. With real disposable income rising only 0.1%, the Fed is likely to view the overall report as evidence of cooling demand without signs of stress in household balance sheets. The update also precedes the December 23 comprehensive revision, which may adjust July–September estimates further but is unlikely to materially alter the inflation profile.
Will Cooling Inflation Strengthen Policy-Easing Expectations?
For traders, the softer-than-expected core PCE print reinforces market confidence that the Fed remains on track to shift toward a more accommodative stance once labor data confirms continued moderation. Treasury markets may respond with a modest bullish tilt, while rate-sensitive sectors could see improved sentiment in the near term.
More Information in our Economic Calendar.
