Capital Economics Reports on U.S. Economic Strength

Investing.com — Capital Economics, a prominent economic research firm, reported on Friday that the real economy remains robust as inflation pressures appear to be subsiding.

The core Personal Consumption Expenditures (PCE) price index, excluding food and energy, recorded a modest month-over-month increase of 0.11% in November, marking the smallest rise in the past six months. This follows two consecutive months with approximately 0.25% increases, exceeding the Federal Reserve's target rate.

The November data indicates a decline in the three-month annualized core inflation rate to 2.5% from 2.8%, although the six-month rate saw a slight uptick to 2.4% from 2.3%.

Despite these fluctuations, the annual inflation rate remained stable at 2.8%. Meanwhile, headline PCE prices, encompassing food and energy, rose by 0.13% month-over-month, with the annual inflation rate experiencing a slight recovery to 2.4% from 2.3%.

Regarding consumer spending, real consumption increased by 0.27% in November. Additionally, revised figures for previous months have resulted in an upward adjustment for fourth-quarter consumption growth, now predicted at around 3.0%, an increase from prior forecasts.

Capital Economics forecasts a slight acceleration in fourth-quarter GDP growth to 3.3%, up from 3.1% in the third quarter.

Overall, the data suggests that the U.S. economy is demonstrating continued strength, alongside reduced price pressures, aligning with the Federal Reserve's goals for the economy.

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