Personal Income Rises Slightly Less Than Expected

Personal income rose a solid but slightly lower-than-expected 0.3 percent in September with the wages & salaries component, which weakened in August, also at plus 0.3 percent. Consumer spending was especially solid in September, up an as-expected 0.5 percent and reflecting the month's strength in vehicle sales.

Inflation data are mixed to soft. The overall price index rose 0.2 percent with the year-on-year rate at plus 1.2 percent. This is the strongest yearly showing since November 2014 and is 2 tenths closer to the Federal Reserve's 2 percent target.

Yet the core rate, which excludes food & energy, failed to show much lift, up only 0.1 percent on the month with the year-on-year rate unchanged at 1.7 percent. This rate has been stuck between 1.6 and 1.7 percent all year though is up from 2015's average of 1.4 percent.

The consumer wasn't putting September's increase in income into savings as the savings rate edged 1 tenth lower to what is a still respectable 5.7 percent.

Overall, the consumer ended the third quarter in respectable fashion, pointing to moderate economic momentum going into the fourth quarter.

Recent History Of This Indicator:
Strength for September retail sales points to strength for September consumer spending where the Econoday consensus is calling for a sizable 0.5 percent increase. Personal income is expected to rise a solid a 0.4 percent. Price readings in this report, which are those that the Fed specifically targets, have been subdued but did show improvement in August. But little strength is expected for September with the PCE price index seen 0.2 percent higher and the PCE core index up only 0.1 percent. Note that data in the report will offer a September breakdown of consumer data in the previously released third-quarter GDP report.