The data comes a day after the Fed voted to keep its benchmark interest rate between 3.75% and 4%. Central bank officials said they can afford to evaluate incoming data before deciding on their next move. Fed Chairman Kevin Warsh said that “the period right in front of us is information rich.”
The personal consumption expenditures price index rose 0.5% in September on a seasonally adjusted basis, the largest monthly gain since March. Excluding food and energy, core PCE rose 0.3% on the month and 3.1% annually, figures the Fed regards as more indicative of long-term trends.
Consumer spending climbed 0.5% in September, slightly below the forecast 0.6% gain, while personal income edged up 0.2%, compared with an expected 0.3%. On a quarterly basis, PCE prices rose 2.1% (headline) and 2.5% (core), down from 5% and 3.3% in the second quarter.
Gross domestic product grew faster than its 2.2% pace in the second quarter. The Commerce Department reported gross private domestic investment soared 19.4%, led by a 20.9% surge in equipment spending and an 8.4% rise in intellectual property products. Real sales to private domestic purchasers, a proxy for underlying demand, rose 4.9%.
September’s price uptick was driven largely by a 9.2% jump in gasoline and other energy goods and a 5.4% rise in energy goods and services broadly. Services prices excluding energy and housing increased 0.4%, and housing costs rose 0.3%.
Initial jobless claims edged lower to a seasonally adjusted 194,000 for the week ended Oct. 24, below the 200,000 estimate and near levels last seen in the late 1960s.
“Net, net, economic growth is powering ahead despite the uncertainty of geopolitical risks and the damage posed to many sectors of the economy by higher energy costs,” said Chris Rupkey, chief economist at Fwdbonds. “The economy was thought to have been a lost cause during much of the current Administration’s time in office, but real GDP has bounced back above a 3 percent run rate in Q3 2026 for the first time in a year.”