Personal Income And Spending Strong

The headlines for personal income, up 0.5 percent, and consumer spending, up 0.6 percent, may be a little overstated but today's report for October is strong with only a few moderate details. And moderate may be well overstated for the inflation data which look very subdued.

Income in October got a boost from proprietor income and interest income but was held back slightly by wages and salaries, a key measure of household health that rose only 0.3 percent for a second straight month.

The gain in spending marks a strong opening for the consumer component of fourth-quarter GDP, though in an offset September is revised 2 tenths lower to only a 0.2 percent gain. Still, October's spending is very strong with services leading at a 0.7 percent gain.

Inflation data in this report -- which are the specific gauges for FOMC policy makers -- are headlined by a lower-than-expected 0.1 percent rise in the core PCE price index. The year-on-year rate is also lower-than-expected at 1.8 percent in a reading that doesn't raise any urgency for increased rate hikes from the Federal Reserve. The overall PCE price index inched 0.2 percent higher with this yearly rate holding right at the Fed's target of 2.0 percent.

This is a very healthy report showing that inflation is stable and that consumers are willing to spend as the holidays open up.