Real (inflation adjusted) income rose 0.3 percent and Real spending rose 0.2 percent as the BEA reports no inflation in October.
Chart Notes
- PCE stands for Personal Consumption Expenditures (consumer spending)
- The PCE price index is the BEA’s estimate of price inflation
- Chained dollars means inflation adjusted by the PCE price index withe the base year set at 2017 but it does not matter what the base year is.
With those explanations out of the way, let’s discuss the Personal Income and Outlays report for October.
Personal Consumption Expenditures
- PCE rose $41.2 billion.
- PCE services increased $53.1 billion partly offset by a $11.9 billion decrease in spending for goods.
- Within services, the largest contributors to the increase were health care (led by hospital and nursing home services), housing and utilities (led by housing), and other services (led by international travel).
- Within goods, the largest contributors to the decrease were motor vehicles and parts (led by new motor vehicles) and gasoline and other energy goods.
Personal Outlays
- Personal outlays, the sum of PCE, personal interest payments, and personal current transfer payments, increased $43.8 billion in October.
- Personal saving was $768.6 billion in October and the personal saving rate—personal saving as a percentage of disposable personal income—was 3.8 percent.
- Transfer payments are income items for which no work was performed. Examples include Medicare, Medicaid, Food Stamps, and Social Security.
Month-Over-Month Prices
- From the preceding month, the PCE price index for October increased less than 0.1 percent.
- Prices for goods decreased 0.3 percent and prices for services increased 0.2 percent.
- Food prices increased 0.2 percent and energy prices decreased 2.6 percent.
- Excluding food and energy, the PCE price index increased 0.2 percent.
Year-Over-Year Prices
- From the same month one year ago, the PCE price index for October increased 3.0 percent.
- Prices for goods increased 0.2 percent and prices for services increased 4.4 percent.
- Food prices increased 2.4 percent and energy prices decreased 4.8 percent.
- Excluding food and energy, the PCE price index increased 3.5 percent from one year ago.
Key Points
- The price of services is what’s driving reported inflation.
- A huge decline in the price of energy kept reported PCE price inflation to zero percent. The same thing happened with the CPI.
CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
A 2.5 percent decline in energy smoothed the CPI. But for the 27th straight month, the cost of rent rose at least 0.4 percent.
On November 14, I reported CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
Groundhog Day for Rent
I repeat my core key theme for two years now. People keep telling me rents are falling, I keep saying they aren’t.
Rent of primary residence, the cost that best equates to the rent people pay, jumped 0.5 percent. Rent of primary residence has gone up at least 0.4 percent for 27 consecutive months!
All these “rents are falling” projections have been based on the price of new leases, but existing leases, vastly more important, keep rising.
Why Are Americans in Such a Rotten Mood? Biden Blames the Media
For discussion, please see Why Are Americans in Such a Rotten Mood? Biden Blames the Media
For discussion of the latest polls, please see Five Alarm Bell – Biden Trails Trump in Five of Six Battleground States
On November 8, I reported Credit Card Delinquencies Surge as Consumer Debt Tops $17 Trillion
Perhaps you do not believe there was no inflation in October. If so, you may be in a sour mood too.
I am an old man. It was during the Viet Nam war that I first figured out that our government would lie to us whenever convenient. 55 years later our government is still lying to us. “The vaccine is safe and effective”, “inflation is minimal”, “Social Security will never run out of money”, “We’re from the government and we are here to help you.”
Amazing the number of people who still believe this baloney. Amazing the number of people who read “the news” every morning and believe every word of it.
Just be sure to SHOP your INSURANCE premiums annually as well. IT PAYS to also SELF-INSURE with the highest possible deductibles they will accept. In my long 50 plus years, I have saved THOUSANDS (banked) in Premiums.
Buy used EVERYTHING and keep that shit until it no longer works/runs/fits, etc.
There is NO reason to pay top dollar but yet that is what the lazy ones do.
With that said, NEW Shit can be bought for nearly nothing because WAITING is the key. Instant Gratification is what kills the beasts called Americans.
For example, I bought my last car TWO and ONE HALF years old at a TRUCK dealer who sold nearly 99% of this inventory being Diesel Pickups. The trade-in Manager sold a $24,000 used Car (Plug in EV/Hybrid) for $14,000 because that is a bit more than he could have fetched at auction. We are still driving that car and it is an incredibly nice used Vehicle and we will drive it ’til it no longer will run and we will then dump it.
Mish, where’s the point at which you and every other economic analyst wil give up interpreting official reports because they are just TOO bogus: fraudulent pulp written to deceive the public and too fictional to take seriously any longer? I feel like we’re there already…
USA GOV STILLS calculate one of the most of important metrics – labor metrics
by DOING COLD CALLING PERSONS at their homes, EACH MONTH!!
can you imagine that???
yeah… I totally believe their price index metric.
let me put this straight!
USA is biggest economy in world.
330+ mln people.
milions of private companies – small – big ones.
one of biggest import-export source in the world, might be china only bigger.
EACH day each of 330 mil (280 adults) person buys something!
and SOMEONE DARES TO SAY HE-SHE CAN CALCULATE PRICE INDEX on all items on monthly base w/ some kind of precision???
———-
let me add.
USA GOV STILLS calculate one of the most of important metrics – labor metrics
by DOING COLD CALLING PERSONS at their homes, EACH MONTH!!
can you imagine that???
yeah… I totally believe their price index metric.
alx
ps
btw, less price index increased LESS USA GOV increases pension money adjusment for retirees. just food for thought!!!
The cost of living in San Francisco plunged after retail theft was legal.
The CPI was zero in July 2022 and zero in Oct 2023. SPX 1M flopped lower in Oct 2023. QQQ 1M flipped higher today. A large bar/on low vol. Exogenous “event” cause inflation/deflation. MSFT, Intel, NVDA …are 20 miles south of Lebanon. The risk: if the Israeli/Hamas war expand QQQ assets might be lost.
The CPI M/M might plunge into a negative territory.
Would The Ministry of Truth lie to you?
never
Robert McNamara’s statistics “proved” the US was winning the Vietnam war. Months away from total victory!!!
McNamara’s proteges during the Bush/Obama regimes “proved” the US was winning in Iraq. Months away from total victory!!!
McNamara’s proteges during the Bush/Obama regimes “proved” the US was winning in Afghanistan…. Months away from total victory!!!
The same Pentagon statisticians are running Biden’s economics departments
So, you’re saying beware the prognosticators & technocrats who wake up with wet sheets after a night dreaming about bar charts?
at least they say truth about Ukraine, finallly
/s
the best and brightest
“Perhaps you do not believe there was no inflation in October. If so, you may be in a sour mood too”
People get particularly cranky when the price of gas goes up. They don’t get particularly happy when it comes back down.
During the Great Depression Federal reps were tasked to check on the meager rural “poor” areas starving. What they found was the opposite. Especially in Cajun La country. Nothing changed for these folks. Still farming, hunting, fishing and eating mud bugs (crawfish). No starving to report.
Those days however are long gone. Not many living that lifestyle these days. Quite the opposite. Many are living well beyond their means, not prepared for even the slightest hardship or even minor inconvenience. I witnessed this not long ago with the TX super freeze. People standing in line for food and water within 48 hrs.
If some choppy financial times makes people start doing a little more saving, planning and living within their means I honestly don’t see a problem with it. Especially if they pass it on to the youg’uns to not be dipsh***s with their personal finances and take some personal responsibility for their own circumstances.
the great depression?… Not even 1/3 of today’s population in the US, 1/4 on a global scale. People could survive easily, naturally, especially so in climatologically benign regions… Ain t nothing to compare , we re now sailing on another wave , a totally disastrous one, with 8 billion and ticking ruthlessly. Say hello to your grandchildren on my behalf !
Darwinism is the survival of the fittest, i.e. those that prepare for though times.
Universal social services and fiscal kicking the can, has created the condition for reverse Darwinism: the survival of the most profligate.
When natural law finally prevails, it will be brutal and unjust.
What makes you think Americans are living beyond their means? You commenters are all the same, handing out your ten tablets of prudence and parsimony from whatever little hill you can find to climb up on.
Incomes are way up since 3 years ago, the personal savings rate is at an all time high and credit cards use is primarily reserved used for points and cash-back rewards.
Americans are awash in money! You’re working from a dated playbook where millennials are splurging in avocado toast and matcha lattes with gig work pay. That era has passed.
Awash in money!
How can it be!
Perhaps they made more of it than was needed?
In fact, yes. This pushes a button, obviously, because every slob & his miserable uncle opiates on the idea that everyone is at least a little bit worse off than themselves, and that if they are, it’s because they’re a numb nuts with their measley lots. It’s silly. Americans are loaded. They’re making demands at work and they’re getting them. Time to turn the page.
Incomes are not way up from 3 years ago. Inflation adjusted incomes are up less than 3%. Savings rates at 3.8% are not a record. In fact they are well below the historical averages.
I hope you don’t mean big fat American has to give up his all you can eat?
Americans are fitter than ever. You’re just being a hateful brat.
Another Statistic to question . . .