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September Consumer Spending Growth, Annual Core Inflation Ease, Delayed Data Show

11:59 AM ET 12/05/2025 - MT Newswires

Personal consumption expenditures rose 0.3% in September, in line with Wall Street's estimates, the Bureau of Economic Analysis said in a report. Consumer spending rose by a downwardly revised 0.5% in August. The report was delayed due to the now-ended federal government shutdown.

"Combined with recent weaker employment data, the softer consumer spending and core inflation figures should cement a Fed rate cut next week while keeping the door open for more easing next year," Sal Guatieri, senior economist at BMO Capital Markets, said in a report.

On Thursday, data released by global outplacement firm Challenger Gray & Christmas showed job cuts in the US surpassed 1.1 million in the year through November, reaching their highest year-to-date total since 2020. On Wednesday, payroll processing firm ADP (ADP) data showed employment in the US private sector surprisingly fell in November.

The annual headline PCE price index accelerated to 2.8% in September from 2.7% in August, while the metric held steady sequentially at 0.3%, according to the BEA. Both prints were in line with market estimates.

The Fed's preferred measure, which excludes food and energy, slowed to 2.8% annually from 2.9% in August. Sequentially, the core index remained unchanged at 0.2%. Both measures met consensus expectations.

The central bank's Federal Open Market Committee is set to meet Dec. 9, with a decision on interest rates due the following day. The odds of a 25-basis-point rate cut slipped to 87% on Friday from 88% on Thursday, but up from 62% a month ago, according to the CME FedWatch tool.

"Softer spending momentum and steady inflation should provide further reassurance to the Fed, solidifying the case for another quarter-point rate cut at next week's FOMC meeting," Ksenia Bushmeneva, economist at TD Economics, said in a report.

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