A day after the advance read on third quarter GDP showed the consumer shouldering the burden again when it comes to sustaining the expansion, fresh data for September showed US consumer spending lagging estimates.
Personal consumption for the month rose just 0.2% versus expectations for a 0.3% gain. The range was -0.1% to 0.6% from 66 economists.
You’re reminded that the last read on personal consumption showed consumer spending rose just 0.1% during August. That was the most meager gain in six months. It was revised higher to 0.2% in Thursday’s release.
Personal income, meanwhile, rose 0.3% in September, matching estimates. The range there was 0% to 0.4%.
Taken together with an uptick in jobless claims, Thursday’s data is more evidence to support the contention that relative buoyancy notwithstanding, the US economy is decelerating headed into an election year.
Retail sales posted their first drop since February in September, so today’s lackluster personal consumption data isn’t welcome news.
The Fed on Wednesday telegraphed a predisposition to pause on rate cuts, but some analysts doubt the data will cooperate. The market will get ISM and October payrolls on Friday.
At the same time, PCE prices were unchanged MoM and rose 1.3% YoY, supporting the subdued inflation narrative which Powell leaned on during Wednesday’s press conference when pressed on whether the Fed would consider hiking rates in 2020 if trade tensions abated. Core prices were unchanged MoM and rose 1.7% YoY.
