Everyday Economics: The case for a December rate cut

(The Center Square) – Last week brought the delayed September numbers on personal income, consumption, and the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index. It’s backward-looking, but it’s the last clean read on inflation before the Fed meets in December. Headline PCE prices were up 2.8% year over year in September, a touch higher than August’s 2.7%. Core PCE, which strips out food and energy, also rose 2.8% from a year earlier, down slightly from 2.9% in August. Goods prices moved higher as tariffs filtered through, while services inflation ticked down: prices for goods were up 1.4% from a year earlier in September (vs. 0.9% in August), while services inflation eased to 3.4% from 3.6%.So far, that’s a far cry from the worst-case fears that tariffs would send prices sharply higher. The September report instead shows a modest re-acceleration in goods prices layered on top of a slow, grinding disinflation in services.On the spending side, the c