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Personal Income: Modest Acceleration But Core PCE Slips

November 29, 2018

Bottom Line: Personal income rose more than expected in October. Real consumer spending rose slightly in October, increasing 2.4% annualized, a pace slightly below that of 3rd Quarter, indicating consumers started 4th Quarter spending a bit more cautiously. Core PCE, the Fed's preferred inflation metric, grew 0.10%, 1.1% annualized in the last 3 months and 1.8% over the last 12 months, continuing to decelerate.

Personal Income ROSE by 0.5% in October, compared with market expectations for an increase of 0.4%. The prior month was revised higher from 0.20% to 0.23%. Personal Income is now 4.3% ABOVE its year ago level.

Wages and Salaries ROSE by 0.3%, Wages are now 4.4% ABOVE year ago levels. Personal Tax Payments ROSE by 0.2% and are now 0.7% ABOVE their year ago level, reflecting the year-on-year changes in employment and income.

Disposable Income ROSE by 0.5% and is now 4.8% ABOVE its year ago level.

There were small increases in durable goods, modest increases in nondurable goods spending and modest increases in services spending. Spending is now 5.0% ABOVE its year ago level.

The Saving Rate FELL by 0.10 points to 6.2%.

The PCE Price Index ROSE by 0.2% and is now 2.0% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.8% ABOVE its year ago level.

Real Consumer Spending ROSE by 0.44% and is now 2.9% ABOVE its year ago level. The October level is 2.4% annualized above its Q3 level.

Article by Contingent Macro Advisors