aparnamath

JUST IN: The US still has an inflation problem and it's getting worse again. PCE Inflation rose to 3.6% in September. That's the highest since May. Core PCE Inflation (excludes food and energy) ticked up to 3.1%. That's also the highest since May. Bottom line: Inflation is back near a 3-year high. It's largely due to war in Iran, but there's legitimate concern that inflation is spreading beyond energy.

JUST IN: The U.S. economy is growing rapidly. GDP Growth in the 3rd quarter came in at a hot 3.4%. That was even better than expected. What's driving this? 1) The big AI investment. There was another huge surge in business investment (+12.7%!) 2) Consumer spending also robust. +3.8% in Q3. That's the same as Q2 and the strongest since the end of 2024. Not everyone is feeling the benefits of this growth uptick. But anything related to AI is soaring.

JUST IN: A hot inflation report. Inflation jumped back up to 3.7% (y/y) in September, the highest rate since May. The spike was largely driven by rising gas and diesel prices. Higher airfares and used car prices also triggered the 0.6% monthly gain (biggest since May). Core CPI, which excludes food and energy, climbed to 2.6% -->This was worse than expected and up from 2.4% in August. The big problem = Inflation rose 3.7% in the past year, wiping out 3% average wage gains.

JUST IN: A medicore September jobs report. The US economy added only 29,000 jobs in September (well below ~80k expected). On top of that, there were downward revisions: July was revised down to -10k and August to 133k. Unemployment rate: 4.2% (up from 4.1% in August) The biggest sore spot = wage growth of 3% in past year. That’s a new 5-year low and it’s wiped out entirely by ~3.4% inflation.

Fed Chair Kevin Warsh says 3 things changed that led to the rate hike today: 1) Strength of the economy. "The economy has strenghtened. It’s a judgement I have and the committee has." 2) Inflation summer trends weren’t passing his test for moving toward 2% "clearly and at sufficient speed" 3) Geopolitics (aka war in Iran and oil/diesel). Warsh says "Our judgement about what is the most likely or least likely geopolitical situation has changed"

Americans are getting financially squeezed. Inflation has wiped out wage gains since April. Wage growth in the past year: 3.1% Inflation in the past year: 3.4% Many American households have to belt tighten and make difficult choices on what to cut back on. This is why consumption appears to be slowing (and will likely cool more, especially for middle-class brands).