US personal spending picks-up in September, as does core inflation
By Alexander Bueso
Date: Monday 29 Oct 2018
(Sharecast News) - The pace of consumer spending in the States picked-up a bit last month, despite the hit to incomes from Hurricane Florence, but price pressures were slightly more intense than anticipated too.
According to the Department of Commerce, personal incomes and spending in the US advanced at a monthly clip of 0.2% and 0.4% in September, respectively.
Economists had forecast gains of 0.4% for both.
However, the August rise in personal incomes was revised up by one tenth of a percentage point from 0.3% to 0.4%, while the rate of spending for both July and August were revised higher, by one and two tenths of a percentage point, respectively, to reveal increases of 0.5% for both months.
As a result, the personal saving rate dipped from 6.4% in August to 6.2% for September.
On the inflation front meanwhile, the so-called 'core' price deflator for US personal consumption expenditures rose by 0.2% month-on-month and by 2.0% year-on-year.
Economists had anticipated a 0.1% increase versus August with the annual rate of increase steady at 2.0%.
At the headline level meanwhile, the PCE deflator printed at up by 2.0% year-on-year, as expected.
Commenting on the data, Ian Sheperdson at Pantheon Macroeconomics highlighted the 0.15% month-on-month increase in core PCE prices, putting it down mostly to a 5.6% jump in airfares.
Shepherdson also said that the current pace of spending was "unsustainable", explaining to clients that the incremental impact from tax cuts was now over.
"The saving rate could fall, keeping spending rising faster than incomes, but the recent wobbles in the stock market make that less likely.
"Finally, note that incomes likely were depressed by Hurricane Florence; the October numbers will be constrained by Michael, so we expect a clear rebound in November."
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