As we move into October, inflation remains one of the biggest factors shaping the U.S. economy. Consumer prices increased 0.4% in August, bringing inflation to 3.4% over the previous 12 months. Energy prices were a significant contributor, while core inflation, which excludes food and energy, rose 2.4% over the same period.

The labor market has also shown signs of moderation. The unemployment rate was 4.1% in August, while employers added approximately 162,000 jobs. A gradually changing labor market, combined with continued inflation, remains an important consideration for the Federal Reserve as it evaluates economic conditions.

Interest rates remain an important part of the financial landscape. In September, the Federal Reserve raised its target federal funds rate by 0.25 percentage points, bringing the range to 3.75% to 4.00%. Market rates can also move independently of the federal funds rate, so borrowing costs for mortgages, auto loans and other credit products may not move in lockstep with changes in the Fed’s target rate.

For consumers, this environment is a good reminder to stay focused on the financial decisions within your control. Reviewing your budget, maintaining savings and paying attention to the cost of existing debt can help you stay prepared as economic conditions continue to change. At ALLIANCE, we’re here to help you understand your options and make informed decisions about your financial goals.

– Clay Beardemphl, CFO