Two the Point — Soft Landing in Sight? 

Inflation continues to moderate while the U.S. labor market shows signs of resilience, keeping the economic outlook balanced. Global risks persist, but recent data revisions and international stimulus efforts suggest a cautiously optimistic trajectory for the remainder of the year.

Key Insights:

• PCE Deflator: The Federal Reserve’s preferred inflation gauge rose only 0.1% month-over-month in August, with a year-over-year rate of 2.2%. Core PCE inflation also increased 0.1% month-over-month, bringing the annual rate to 2.7%.
• Labor Market: Despite a dip in consumer confidence, unemployment pressures remain contained, with initial jobless claims retreating towards recent lows.
• U.S. GDP: Revisions to the national accounts data now place the personal savings rate at 4.8% in August, with Q3 real GDP tracking around +3%.
• Global Risks: Ongoing concerns over European manufacturing and a potential U.S. port strike are offset by China’s new fiscal and monetary stimulus efforts, which could drive local consumer demand.
• Monetary Policy: The Fed has moved towards a more neutral stance, with further rate cuts anticipated, depending on upcoming labor market data.