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.
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