Two the Point — Steady Households, Measured Fed

This week’s economic data highlights the continued strength of U.S. households and manageable inflation, reinforcing our confidence in the economy’s ability to achieve a soft landing despite some near-term uncertainties.

• Stock Portfolio Gains: The median value of U.S. households’ stock portfolios surged to $250,000 this month, up from $150,000 at the beginning of the year (University of Michigan Consumer Sentiment survey).
• Household Balance Sheets: Debt-to-income ratios remain healthy compared to countries like Canada and Australia, while credit card debt is low and trending down.
• Inflation (September): Headline CPI rose 0.2% month-over-month and 2.4% year-over-year, with core CPI up 0.3% month-over-month and 3.3% year-over-year. Shelter costs moderated, though food, insurance, and healthcare services saw some upward pressure. Meanwhile, PPI held flat month-over-month, giving the Fed time to navigate inflation pressures. PCE inflation is expected to land at 0.1% month-over-month headline and 0.2% core.
• Federal Rate Outlook: Inflation seems to be settling into a 2-3% range, and we expect the Fed to proceed at a measured pace.
• Q3 GDP Projections: The Atlanta Fed’s tracking estimate for Q3 GDP remains positive at +3.2% quarter-over-quarter annualized rate.
• Election-Related Slowdown: Some firms are holding off on major decisions ahead of the U.S. election, but the economy retains enough momentum to weather this pre-election pause.