Inflation Slows, Boosting Hopes for Deeper Rate Cuts in 2025

The core personal consumption expenditures (PCE) price index, a key measure of inflation used by the Federal Reserve, showed a modest increase of 0.1% in November, marking the slowest growth since May. This increase brought the year-over-year rate to 2.8%, suggesting some progress on inflation after recent stagnation. Federal Reserve officials have become more optimistic, anticipating that they can reduce interest rates in 2025, with projections indicating two potential cuts next year. The solid income growth highlighted in the report, with wages rising by 0.6% in November, suggests that consumers are maintaining spending resilience during the holiday season. However, real spending on services has decreased, reflecting varying consumer behavior amidst economic uncertainties. Lower Treasury yields and stable dollar performance followed the data release, while stock markets have shown positive reactions. In terms of transportation, these economic indicators could signal a stabilizing freight market, where consumer demand remains driven by specific sectors, particularly vehicles. A deceleration in core goods prices may offer relief for transportation costs, assisting freight carriers in managing expenses more effectively. As policy adjustments unfold, the transportation industry should stay adaptive to shifts in consumer spending patterns and potential cost changes stemming from Federal Reserve decisions.