An inflation gauge closely tracked by the Federal Reserve accelerated in August, boosted mainly by higher gas prices.
But excluding the volatile food and gas categories, “core” inflation remained comparatively tame in August, evidence that it’s continuing to cool, though more slowly than it had been earlier this year. Fed officials pay particular attention to core prices, which are considered a better gauge of where inflation might be headed.
The latest data coincides with rising hopes among Fed officials that they may be able to bring inflation back to their target without driving up unemployment or causing a recession. When the Fed released its quarterly economic forecasts last week, it showed that the central bank’s policymakers envision only a small rise in unemployment by the end of 2024: They expect joblessness to rise from its current 3.8% to a still-low 4.1%, along with a gradual drop in core inflation to just 2.6%.
How much a shutdown would weaken the economy would depend on how long it lasts. A short closure probably won’t have much impact on the economy. But it would likely have a more far-reaching impact than previous shutdowns did because a larger portion of the government will close. And in October, millions of people will have to restart student loan payments, reducing their ability to spend on other items. At the same time, long-term interest rates keep rising, which will likely further swell the cost of mortgages, auto loans and business borrowing. The interest rate on the 10-year Treasury note, a benchmark rate for mortgages, has reached nearly 4.6%, close to its highest level in 16 years.
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