Inflation keeps dropping, incomes and spending keep rising, so rates drop in 2024, right?

Given that it's a Holiday week, the monthly income and spending report got moved up into Friday. And it continued the good news on the economy as 2023 wraps up, especially on the inflation front.

Last month, for the first time since April 2020, prices fell on a monthly basis, according to a closely watched report released Friday by the Commerce Department.

US inflation slowed further in November, and consumer spending continued to outpace expectations, lending further credence to the idea that the US Federal Reserve could stick its “soft landing” of bringing down inflation with a barrage of interest rate hikes while not throttling the economy into a recession....

The Commerce Department’s latest Personal Income and Outlays report also showed that consumer spending increased 0.2% from the month before. Economists had expected it to remain flat.

When adjusting for inflation, spending ramped up 0.3% on the month.

Incomes also went up by a solid 0.4% in November, which including the largest one-month increase of wages and salaries since January. It's been a relatively steady series of increases for that form of income throughout 2023.

The bigger story for the financial press was the decline in the "Fed's favored inflation measure" - PCE. Some of it was due to November's falling gas prices, but the underlying "core" inflation also was low, and has been mostly neutered for the 2nd half of 2023.

The core PCE measure of US inflation, often referred to as the #FederalReserve's preferred gauge of price pressures, was better than the consensus forecast,
The 0.1% monthly #inflation print brought the annual measure down to 3.2%.
At 1.9% for the last 6 months, this inflation…

— Mohamed A. El-Erian (@elerianm) December 22, 2023

Now that we have inflation running at the Fed's (artificial) preferred level of 2%, can we stop having them have their Fed Funds rate dtart dropping from 5.4%? When we had 2% core inflation and sub-4% unemployment 5 years ago, then-President Donald Trump was whining that the Federal Reserve was raising rates above....2%. The Fed soon caved and rates three times in 2019, as unemployment stayed below 4% and before we had heard of COVID-19.

I'm not asking for a Bubbly 1.5% like Trump was able to jawbone the pre-COVID Fed into. But we have prices mostly under control, wage and job growth solid but not absurd, and we can still get a solid return on savings if rates were dropped to 3.5% or 4%. And Dems and President Biden should not stay silent in 2024 if the Fed refuses to do what is right, and threatens our strong economy with overly high rates on borrowing.