The 12-month inflation rate, as measured by the personal consumption expenditures (PCE) index, was 2.6% in December, down from its peak of 7.1% in June 2022, and the six-month rate for PCE inflation was even lower, at 2%, which is the target rate set by the Federal Reserve.   

After the nation suffered the worst inflation in four decades in 2021 and 2022, the Federal Reserve’s Federal Open Market Committee hiked rates 12 times from March 2022 to July 2023 and it appears to have succeeded in its battle to end inflation without causing a recession.

Since the Fed has never succeeded before in quelling inflation without choking economic growth and causing a recession, much skepticism about the growth prospects for the economy remains. However, there are reasons for optimism.