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Spending Data Underscores Resilient Consumer Narrative
US consumer spending was more robust than expected in September, data released on Friday showed.
The market-moving potential of the personal income and spending report was theoretically diminished given traders already had the Q3 GDP report in hand. Still, the figures demanded attention.
Personal spending rose 0.7% last month, nearly matching the highest estimate from the five-dozen economists who ventured a guess. The range of estimates was 0.3% to 0.8%.
Real personal spending was solid to
spending up, prices up, income down (ack: all small deltas) … can that divergence be sustained?
Perhaps the Fed will indeed grease the landing and we are simply seeing normalization across the board.
Economy could be normalizing back to inflation 2-ish% (via lower shelter inflation), UE toward 4-5ish% (via higher labor force participation), real GDP toward 3-ish%, UST yields toward 4-5ish% short/5-6ish% long (positive-sloping at levels historically typical pre-GFC/QT).
S&P 500 could be normalizing back to +MSD% topline growth (2024 cons is +5.3%), 15-16-ish% EBIT margins (typical for post-GFC/pre-Covid period), 15-17X-ish NTM PE (ditto).