Personal Income: Modest to Moderate With Core PCE Slipping

Bottom Line: Personal income rose modestly in November, modestly lower than expected. Real consumer spending rose 3.5% from Q2 to Q3 -- this quarter (with only October and November available so far) looks to be growing at 3.4% annualized, indicating consumers are still spending at a modest to moderate pace. Core PCE, the Fed's preferred inflation metric, grew 0.15%, 1.7% annualized in the last 3 months and 1.9% over the last 12 months, suggesting a continued deceleration in trend inflation rates. Personal Income ROSE by 0.2% in November, compared with market expectations for an increase of 0.3%. Personal Income is now 4.2% ABOVE its year ago level. Wages and Salaries ROSE by 0.2%, Wages are now 4.2% ABOVE year ago levels. Personal Tax Payments ROSE by 0.1% and are now 0.4% ABOVE their year ago level, reflecting the year-on-year changes in employment and income. Disposable Income ROSE by 0.2% and is now 4.7% ABOVE its year ago level. There were modest increases in durable goods, small increases in nondurable goods spending and small increases in services spending. Spending is now 4.7% ABOVE its year ago level. The Saving Rate FELL by 0.10 points to 6.0%. The PCE Price Index ROSE by 0.1% and is now 1.8% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.9% ABOVE its year ago level. Real Consumer Spending ROSE by 0.33% and is now 2.8% ABOVE its year ago level. The October/November average is 3.4% annualized above its Q3 level.