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Inflation Cools While Consumer Spending Slows; Trade Deficit Narrows as Markets Rise

  • PCE came in largely as expected, with headline month-over-month at +0.4% and core PCE year-over-year dipping below 4% to 3.9%.

  • Personal spending rose +0.4% monthly but real spending was only up +0.1%, showing high prices biting into consumer spending.

  • Trade deficit narrowed significantly in August to -$84.2 billion, among the lowest deficits in the past year.

  • Retail inventories jumped +1.1% monthly while wholesale inventories fell -0.1%, showing supply/demand imbalance.

  • Pre-markets reacted positively to the data, with the Dow up 170 points, S&P 500 up 25 points, and Nasdaq up 130 points.

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