Personal Income: Modest to Moderate is as good as it gets

Bottom Line: Personal income and disposable income rose modestly in August. Real consumer spending rose 4.2% from Q1 to Q2 -- this quarter (with only July and August available so far) looks to be growing at only 2.4% annualized, indicating consumers are still spending cautiously with declining expenditures on durable goods in August. This report suggest there is downside risk to current consensus GDP forecasts of 2.8% for the 3rd Quarter. Finally, consumer inflation rose modestly year-over-year, and while still muted, reached its highest level in two years. Personal Income ROSE by 0.2% in August , compared with market expectations for an increase of 0.2%, Personal Income is now 3.1% ABOVE its year ago level. Wages and Salaries ROSE by 0.1%, Wages are now 3.7% ABOVE year ago levels. Personal Tax Payments ROSE by 0.4% and are now 1.4% ABOVE their year ago level, reflecting the year-on-year changes in employment and income. Disposable Income ROSE by 0.2% and is now 3.4% ABOVE its year ago level. Consumer Spending was UNCHANGED, compared with market expectations of an increase of 0.1% The prior month was revised higher. There were modest decline in durable goods, small decline in nondurable goods spending and small increases in services spending. Spending is now 3.6% ABOVE its year ago level. The Saving Rate ROSE by 0.1 points to 5.7%. The PCE Price Index ROSE by 0.1% and is now 1.0% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.2% and is now 1.7% ABOVE its year ago level. Real Consumer Spending FELL by -0.1% and is now 2.6% ABOVE its year ago level. The July/August average is 2.4% annualized above its Q2 level.