The Federal Reserve's preferred inflation gauge shows that price increases approached 3% in 2025, indicating that the Fed still has much work to do to restore living costs to pre-pandemic low levels.

 

According to a government report released on Friday (delayed due to the federal government shutdown), the Personal Consumption Expenditures (PCE) price index rose sharply by 0.4% in December. Over the 12 months ending in December, the inflation rate climbed from 2.8% to 2.9%.

 

After the data release, spot gold's intraday gain expanded to 1%.

 

Over the past few years, the Federal Reserve has been committed to lowering the inflation rate to its 2% target.

 

The so-called core inflation rate, which excludes food and energy, also rose by 0.4% in December. The annual increase in core inflation rate was revised up from 2.8% to 3.0%, hitting the highest level in nearly a year.

 

After the release of the latest economic data, there was little change in U.S. short-term interest rate futures; traders still insisted on betting that the Federal Reserve would cut interest rates in June.

 

This delayed December PCE report came out a week after the January Consumer Price Index (CPI) was released, so it seemed somewhat outdated and its importance to financial markets was relatively reduced.

 

CPI data showed that the inflation rate fell below 2.5% in January, but economists said it was unclear whether this downward trend would continue. The government shutdown in the fall of last year may have temporarily underestimated the inflation level.

 

In the same economic report, the government stated that consumer spending increased by 0.4% and income rose by 0.3% in January.

 

 

According to the preliminary estimate data released by the U.S. government on Friday, after growing by 4.4% in the previous quarter, the inflation-adjusted gross domestic product (GDP) grew at an annual rate of 1.4% in the fourth quarter. Data from the U.S. Bureau of Economic Analysis (BEA) showed that the overall economic growth in 2025 was 2.2%.

 

This weak quarterly data was lower than all forecasts in a Bloomberg survey of economists. During the three months of the quarter, the U.S. government was in a shutdown for nearly half the time. BEA stated that the government shutdown reduced GDP growth by about 1 percentage point.

 

Less than an hour before the GDP data was released, Trump posted on social media that last year's government shutdown caused the United States to "lose at least 2 percentage points in GDP".

 

Trump wrote on Friday: "The Democratic shutdown cost the United States at least 2 percentage points in GDP. That's why they are now doing a 'mini-version' shutdown. No more shutdowns!" He then continued to call for lower interest rates and expressed dissatisfaction with Powell.

 

Democrats have previously stated that they will only vote to approve additional funding if the government agrees to adopt new restrictions on immigration crackdowns. Earlier, a high-profile violent conflict involving federal officials occurred in Minnesota.

 

Despite the slowdown at the end of the year, these data still marked a year of solid economic performance for the United States. The economy contracted in the first quarter of 2025 amid a surge in imports before the implementation of tariffs, but then ended the year with one of the strongest growth rates in years. This transformation occurred after Trump withdrew his most punitive taxation measures and the Federal Reserve lowered interest rates. These measures helped the stock market hit record highs and prompted wealthy Americans to continue spending.

 

Trump returned to the White House last year, promising to bring a "golden age" to the United States, including bringing manufacturing back home and reducing the cost of living. Factory activity has just begun to recover after a long period of stagnation, while the inflation rate in 2025 has barely changed, making affordability a core issue in this year's midterm elections央广网