Inflation eased during the same period, nearing the Federal Reserve’s 2 percent target. The personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, increased by 2.5 percent annually, down from 3 percent in the first quarter.
Core PCE inflation, which excludes volatile food and energy prices, grew by 2.8 percent, a drop from 3.7 percent earlier this year.
Despite a series of 11 interest rate hikes in 2022 and 2023 aimed at curbing inflation, the US economy showed remarkable resilience. Inflation, which peaked at 9.1 percent in mid-2022, has now fallen to 2.5 percent, according to the consumer price index.
However, job market growth has slowed recently. From June to August, employers added an average of 116,000 jobs monthly, the lowest three-month average since mid-2020. The unemployment rate rose to 4.2 percent, up from last year’s 3.4 percent.
Last week, the Federal Reserve responded to easing inflation and a slowing job market by cutting its benchmark interest rate by half a percentage point, its first-rate reduction in more than four years. The Fed now focuses on stabilizing the job market, given the progress in controlling inflation.