United States: Inflation remains sticky as growth holds firm - TD Securities

Core PCE inflation for September is forecast by TD Securities at 0.32% m/m and 3.1% y/y, with the release expected to confirm that US inflation pressures remain elevated. The bank puts market-based core PCE at 0.34% and expects energy to drive headline PCE to 0.49% m/m. A slight contraction in real spending, alongside modest income growth, would highlight the squeeze on consumers. For Q3, TD Securities projects annualised US real GDP growth of 2.5% q/q, below consensus but still indicative of robust underlying activity.

PCE figures set to reinforce inflation risks

"September PCE prices are likely to reflect the strong CPI print."

"We expect core PCE picked up to 0.32% m/m (3.1% y/y) with strong goods and services."

"Headline was also likely faster at 0.49% (3.6% y/y) due to energy."

"Underlying inflation should accelerate, with market-based core PCE likely rising 0.34%."

"PCE prices to reflect elevated inflation risks while we expect real spending and income to turn negative."

"Consumption likely remained resilient while decelerating slightly with fixed investment also strong in large part due to AI."

"We expect GDP growth picked up in Q3 to 2.5% from 2.2% previously with underlying activity remaining robust."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)