by Mish

The Econoday consensus estimates missed across the board. Moreover October was revised a bit lower, effectively making the numbers worse.

November may have been a cycle high for confidence but it actually proved a weak month for the consumer. Personal income was unchanged in November as the wages & salaries component dipped into the negative column at minus 0.1 percent. Consumer spending rose 0.2 percent and reflected specific weakness in vehicles. Not helped by the weakness in income, the consumer had to dip into savings during the month where the rate fell 2 tenths to 5.5 percent.
Price data are very flat, unchanged for both the PCE and PCE core (less food & energy) with the year-on-year rate at 1.4 percent for the PCE and at 1.6 percent for the core. And in a comparison that doesn’t point to accelerating inflation pressures, the year-on-year rate for the core fell 2 tenths to 1.6 percent..
Two months into the fourth quarter, consumer spending is running at a plus 2.0 percent annualized pace, well down from the 3.0 percent rate of the third-quarter (see GDP report earlier this morning).
But to put the report in context, the wages & salaries component had been showing outsized strength in recent months as had vehicle sales. So one month of weakness shouldn’t be a surprise. But the inflation readings are clearly a concern for Fed policy makers who want to see pressures building.

As typically the case,  Econoday views things in the best possible light.


Auto sales are overstated given the rise in inventories. Auto sales rate to drop further, incentives higher, or both. GM announced layoffs at five locations.

This report will take a couple a tick or more off GDP estimates for the fourth quarter.

The third quarter will be the highlight of the year,and it won’t last.

Mike “Mish” Shedlock

Personal Income Up But Real Consumer Spending Declines Second Month

The BEA’s Personal Income and Outlays report shows personal income rose 0.4% but consumer spending rose a scant 0.1% in February.

Personal Income, Spending, PCE Inflation “Unexpectedly Weak”: Real Income and Spending Decline

The BEA reports “Real DPI decreased 0.1 percent in August and Real PCE decreased 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.”

Consumer Spending Barely Moves Despite Jump in Income: Deflationary Headwinds?

Today’s personal income and outlays report shows consumer spending rose 0.1% while income rose 0.4%. Prices fell 0.1% while core prices rose 0.1%.

Personal Income, Spending, PCE Inflation Up in April

Consumer spending and personal income increased by 0.4% in April, matching the Econoday consensus estimates.

Personal Income Jumps $71.7 Billion: Who Got Da Money?

The BEA Personal Incomes and Outlays Report shows disposable personal income rose by $71.7 billion in May.

Personal Income Flat in June, May Revised Lower: PCE Inflation Down Again

Those expecting the relatively strong second-quarter consumer spending to continue in the third quarter may wish to reconsider.

Personal Income Declines in January, Spending Very Weak in December and January

The BEA combined reports for January and February due to the shutdown. February details are incomplete.

Personal Income Jumps But Spending Weak

Personal income rose 0.4% in August but spending, both nominal and real, rose a weak 0.1%

Consumer Spending Flat, PCE Inflation Weakest Showing In 16 Years, Rate Hike Odds Rising

The market is increasingly convinced the Fed will hike in June, even as the economic data sinks.