US August PCE growth remains stable, personal spending exceeds expectations!

At 20:30 on Friday in the East 8th District, the United States released the August PCE data. The core PCE year-on-year rate recorded 2.9%, in line with expectations and unchanged from the previous value. The core PCE month-on-month rate recorded 0.2%, in line with expectations, and the previous value was revised from 0.30% to 0.2%.

The overall PCE year-on-year rate recorded 2.7%, in line with expectations and lower than the previous value of 2.60%. The PCE month-on-month rate recorded 0.3%, in line with expectations and lower than the previous value of 0.20%.

CNBC commented that U.S. core PCE inflation in August basically remained stable, which may allow the Federal Reserve to maintain its previously established pace of rate cuts. Although the Fed's inflation target is 2%, these data are unlikely to change policymakers' approach—they stated last week that they expect to implement two more 25 basis point rate cuts before the end of the year.

U.S. personal spending in August grew more than expected, reaching a new high since March 2025, while underlying inflationary pressures remained stable, indicating the resilience of U.S. consumer demand.

After the data was released, spot gold fell slightly in the short term and then rebounded.

Despite a significant slowdown in the labor market and stagnant employment growth over the past three months, consumption continues to rise, mainly driven by high-income households, who benefit from a strong stock market and still relatively high housing prices.

Federal Reserve data this month showed that U.S. household wealth jumped to a record $176.3 trillion in the second quarter. However, low-income households still face pressure, and due to rising goods prices caused by import tariffs, they bear a heavier burden. When the federal government's Supplemental Nutrition Assistance Program (commonly known as "food stamps") cuts take effect, greater pressure will follow.

Oxford Economics Chief U.S. Economist Sweet said: "Since consumption is mainly concentrated among high-income households, the risks to consumption growth forecasts are also concentrated on the main drivers of household wealth—the stock market and housing prices. The wealth effect is having an increasing impact on consumer spending. When the stock market and housing prices rise, this is positive, but if they falter, there is risk."

In addition, whether consumption can maintain this momentum largely depends on the labor market, which has already shown signs of slowing—hiring has slowed and wage increases have moderated. Americans are still dealing with persistent inflationary pressures, and as the impact of President Trump's tariff policies gradually transmits to the economy, inflation may remain elevated. While many companies initially delayed price increases when handling backlogged inventory, if companies do not pass some costs on to consumers, profit margins will be at risk. (Golden Ten Data APP)

Earlier on Friday, Richmond Fed President Barkin stated that although both the U.S. unemployment rate and inflation are deviating from the Fed's set targets, he believes the risk of further deterioration in both is limited.

Barkin said on Friday: "We are very focused on balancing inflation and the unemployment rate, and striving for a soft landing for the economy. Both have shown signs of moving in the wrong direction, but on the other hand, the downside risks are limited, and we will have to adjust our stance as we get more information."

Last week, Fed officials voted to cut the benchmark interest rate by 25 basis points in response to growing concerns about a slowdown in the labor market. Prior to this, the Fed had kept rates unchanged throughout 2025 to assess the inflation risks that might arise from Trump's tariff policies.

The forecasts released after the Fed meeting, as well as subsequent public comments, showed divisions: some officials want to continue cutting rates at upcoming meetings to prevent employment risks, while others remain more concerned about inflation potential.

Barkin, who is not a voting member of the Federal Open Market Committee this year, said that the uncertainty that shrouded the economic outlook earlier this year has begun to dissipate for U.S. companies.