United States: Sticky inflation meets resilient growth - TD Securities

TD Securities expects September PCE data to confirm elevated US inflation pressures. Core PCE is forecast at 0.32% m/m and 3.1% y/y, with market‑based core PCE at 0.34%. Headline PCE is seen at 0.49% m/m, driven by energy, while real spending turns slightly negative and income growth remains modest, underscoring a squeeze on consumers. They project US Real GDP at 2.5% q/q annualized in Q3, below consensus but still reflecting robust underlying activity.

PCE data to confirm 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.)