Economic indicators show prices rising more slowly while layoffs stay limited
The latest batch of US data released on Thursday showed inflation continuing to ease, with prices rising at a slower pace, while jobless claims pointed to a stable labour market and economic growth remained robust.
According to the Bureau of Economic Analysis, the personal consumption expenditures (PCE) price index—the Federal Reserve’s preferred inflation measure—stood at 2.8 per cent, while core PCE inflation (excluding food and energy) was 2.9 per cent. These figures suggest inflation is no longer accelerating and is gradually moving closer to the Fed’s 2 per cent target.
While another stress area for Jerome Powell—the labor market—has visibly eased a bit of stress, as the US Department of Labor reported that initial jobless claims rose slightly to 200,000 in the week ended January 17, well below economists’ expectations of 210,000. The data indicate that layoffs remain limited and hiring continues at a steady pace.
The same report also indicated that continuing jobless claims dropped by 26000 to 1.849 million for the week ending January 10. At the same time, economic growth surprised on the upside. The BEA said real gross domestic product (GDP) expanded at an annualised rate of 4.4 per cent in the third quarter of 2025, up from 3.8 per cent in the previous quarter and slightly higher than earlier estimates of 4.3 per cent.
“The increase in real GDP in the third quarter reflected increases in consumer spending, exports, government spending, and investment. Imports, which are a subtraction in the calculation of GDP, decreased,” the US government release said.
The government release highlighted that growth was supported by consumer spending, exports, government spending, and business investment, while lower imports added to overall output. The strongest gains came from the services sector, which continued to benefit from resilient consumer demand.
Together, the data point to a U.S. economy that is cooling on inflation but not slowing sharply on growth or jobs. For households, it means fewer price shocks and stable employment. For policymakers, it means balancing strong growth with the need to ensure inflation continues to move lower in the months ahead.
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