Personal Income And Outlays Show Moderation

Moderate if not moderation is the theme from September's sweep of personal income, consumer spending, and PCE inflation data. For monetary policy the biggest headline is core PCE prices which missed monthly expectations at no change though the year-on-year rate did make the consensus at 1.7 percent which, however, is down 1 tenth from August and is less near the Federal Reserve's 2 percent target. The overall PCE rate, which includes food and energy, was also unchanged on the month and also fell 1 tenth on the year, to 1.3 percent.

Income moderated 2 tenths in September to an as-expected 0.3 percent with the wages & salaries component unchanged in a very soft reading that, however, followed an outsized 0.6 percent gain in the prior month. Personal consumption rose an as-expected 0.2 percent with expected strength in durables, up 0.4 percent, offset by a 0.1 percent decline for non-durables and only a 0.2 percent rise on service spending.

This report is soft and is on the weak side of the Federal Reserve's outlook for the economy, based on yesterday's press conference by Jerome Powell who is expecting a little more punch. Whether consumer spending improves in October will go a long way to establishing expectations whether the Fed in December cuts rates once again.