United States: Resilient growth runs alongside sticky inflation - TD Securities

Consumers face a squeeze from persistent US inflation pressures, according to TD Securities, which expects September PCE data to confirm that price pressures remain elevated. Its forecasts put core PCE at 0.32% m/m and 3.1% y/y, and market-based core PCE at 0.34%. Energy is expected to drive headline PCE to 0.49% m/m, even as real spending slips slightly into negative territory and income growth stays modest. For Q3, TD Securities projects US real GDP growth of 2.5% q/q annualised, below consensus, though underlying activity remains robust.

Will PCE data 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.)