Analysts botched their forecast for spending for September-and for no apparent reason. Personal spending declined 0.2 percent after jumping 0.5 percent in August. The latest figure came in below market expectations for a 0.1 percent rise. Weakness was in the durables component which fell 2.0 percent after a 2.1 percent jump in August, reflecting swings in auto sales. Lower gasoline prices pulled down on nondurables. Nondurables spending declined 0.3 percent after falling 0.4 percent in August. Servicesfirmed 0.2 percent, following a 0.5 percent spike in August.
PCE inflation remains soft. The September figure matched expectations for a 0.1 percent increase and followed a dip of 0.1 percent in August. Core PCE inflation rose 0.1 percent in September, following a gain of 0.1 percent in August and equaling expectations.
On a year-ago basis, headline PCE inflation held steady at 1.4 percent in September. Year-ago core inflation was 1.5 percent in both September and August. The Fed doves will not be in a rush to boost policy rates early next year.
Today's report shows continued moderate growth in income. Spending has been volatile on a monthly basis and the September numbers should not have been a surprise.
Recent History Of This Indicator:
Personal income growth posted a 0.3 percent gain in August, following a 0.2 percent rise in July. The wages & salaries component was even stronger with a 0.4 percent boost, following a 0.2 percent increase the month before. Personal spending jumped 0.5 percent after no change in July. Strength was in the durables component which jumped 1.8 percent after no change in July. August reflected a jump in auto sales. Lower gasoline prices tugged down on nondurables. Nondurable spending declined 0.3 percent after no change in July. Services jumped 0.5 percent in August after being unchanged the month before.
The latest inflation numbers give the Fed plenty of flexibility for maintaining loose monetary policy. PCE inflation slowed to a monthly no change in August from 0.1 percent in July. Core PCE inflation posted at 0.1 percent, equaling the pace for July. On a year-ago basis, headline PCE inflation eased to 1.5 percent from 1.6 percent in July. Year-ago core inflation was 1.5 percent in both August and July. Again, PCE inflation remains well below the Fed goal of 2 percent.
Personal income growth posted a 0.3 percent gain in August, following a 0.2 percent rise in July. The wages & salaries component was even stronger with a 0.4 percent boost, following a 0.2 percent increase the month before. Personal spending jumped 0.5 percent after no change in July. Strength was in the durables component which jumped 1.8 percent after no change in July. August reflected a jump in auto sales. Lower gasoline prices tugged down on nondurables. Nondurable spending declined 0.3 percent after no change in July. Services jumped 0.5 percent in August after being unchanged the month before.
The latest inflation numbers give the Fed plenty of flexibility for maintaining loose monetary policy. PCE inflation slowed to a monthly no change in August from 0.1 percent in July. Core PCE inflation posted at 0.1 percent, equaling the pace for July. On a year-ago basis, headline PCE inflation eased to 1.5 percent from 1.6 percent in July. Year-ago core inflation was 1.5 percent in both August and July. Again, PCE inflation remains well below the Fed goal of 2 percent.
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