US: Focus on personal income & spending data – Wells Fargo

Analysts at Wells Fargo note that US real personal spending finished Q3 on a high note, rising 0.6 percent in September and marking the second-fastest monthly growth rate of the past three years.

Key Quotes

“Real consumer spending is up a solid 2.7 percent on the year, where it has hovered for most of 2017.  Personal income growth disappointed again, however, with just a 0.4 percent nominal gain. September’s weak job growth likely weighed on income growth, and we may get a rebound in October. Through the monthly noise, the soft income growth seen in recent months has meant that consumers continue to draw down their saving rate. The saving rate fell to 3.1 percent in September from 3.6 percent during the first two months of Q3, down from as high as 6.0 percent two years ago.” 

“Members of the FOMC will be watching the October print for a rebound in core PCE inflation. Some upward momentum heading into 2018 would bode well for continued fed funds hikes next year.”