Core PCE Falls While Real GDP Accelerates 3rd Quarter 2023 chart

  • A near-flattening of goods prices — led by a drop in the cost for durable goods — slowed Personal Consumption Expenditures (PCE) inflation to 3.0 percent year-over-year in October.
  • Omitting energy and food, the Core PCE price index was up 3.5 percent from a year ago. This was the closest reading to the Federal Reserve’s 2 percent inflation target since May 2021.
  • PCE inflation remains concentrated in services, in which prices grew 4.4 percent through the last 12 months. Higher housing and health care costs were the largest contributors.
  • The economy is continuing to grow, even amid slower core PCE inflation. Real GDP rose at an annualized rate of 5.2 percent in the third quarter, double the second quarter measure.
  • Less pricing pressure amid a growing economy indicates that the Federal Reserve may be able to minimize odds of a recession in 2024 as it continues to tamp down inflation.