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Thursday, December 7, 2023

U.S. GDP report indicates sustained disinflation, Federal Reserve closely monitors

U.S. GDP report indicates sustained disinflation, Federal Reserve closely monitors

The latest U.S. Gross Domestic Product (GDP) report released on Thursday reveals a continued trend of disinflation in the country, as per the Personal Consumption Expenditures (PCE) price indexes. The report incorporates two distinct inflation metrics: PCE price indexes excluding food, energy, housing, and PCE services without energy and housing.

The PCE price index fell to a 3% rate in the second quarter from 4.1% in the first quarter, while PCE services saw a decrease to a 3.5% rate from 5.1%. This data underscores the ongoing disinflation trend in the American economy.

Federal Reserve officials, including Chair Jerome Powell, are closely scrutinizing these inflation fluctuations in non-housing services. Powell has segmented core inflation into three parts: goods sector, housing services, and non-housing services. He noted significant declines in core inflation across these sectors.

Despite these changes in individual sectors, the broader core PCE price index remained steady at 3.7% for the second quarter. The stability of this broader index offers a contrasting perspective to the decreases observed in specific sectors.

The Federal Reserve’s close monitoring of these inflation metrics is part of its ongoing efforts to manage economic stability and growth in the United States. The latest GDP report’s findings will likely play a key role in shaping future monetary policy decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Source: Investing.com

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