US Personal Spending rose 0.3% in October according to data released today. Analysts at Wells Fargo point out the increase took place despite softening trends in consumer confidence.
Key Quotes:
“Consumer spending notched a solid 0.3% increase in October even as income growth appeared to stall. Despite the initial impression, it is not as though consumers are spending money they do not have. Most of the reason behind the 0.0% change in income is the fact that personal interest income alone fell $28.6 billion or 1.7% in the month. Wages and salaries actually posted a solid increase of $33.8 billion or a healthy 0.4%.”
“We have maintained that rather than outright declines, we are in store for a moderation in the pace of consumer spending. Today’s report is right in line with that expectation; spending is slowing, not collapsing. We have a 2.0% rate of PCE growth penciled in for the fourth quarter, and while that would reflect a slowing from the 2.9% pace of consumer spending we saw in Q3, it is not a steep retrenchment.”
“Various FOMC members have characterized the current state of monetary policy as being in a good place. While we do not think a rate cut is in the offing at the final meeting of the year on December 11, the soft inflation numbers give the Fed scope to eventually cut rates further if their assessment changes.”
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