The headline from this morning’s income and spending data is The Fed’s favorite inflation indicator – Core PCE Deflator – printed pretty much in line with expectations (headline up 0.1% MoM was marginally hotter than expected). The year-over-year prints dropped to 5.0% and 4.4% respectively for headline and core – while both lower and trending down from the highs last year, these prints are still the highest since 1991…Source: BloombergAmericans’ income was expected to rise 0.2% MoM and spending drop 0.1% MoM and while incomes met expectations, spending was weaker than expected (-0.2% MoM). That is the second straight month of spending declines…Source: BloombergOn a year-over-year basis, spending growth continues to outpace income growth…Source: BloombergNotably, govt wages and salaries are growing faster than those of private workers for the first time since March 2020:Private workers wage growth Dec 4.4%, vs 5.1% in NovGovt workers wage growth Dec 4.8%, vs 4.9% in NovAll of which leaves the personal savings rate languishing near record lows (although it did improve from 2.9% to 3.4% – its highest since May 2022 – as credit card debt hits record highs)…Source: BloombergWe note that the savings rate was revised significantly higher in the last two months… (as credit card debt has soared)…Does that really sound like the ‘strong consumer’ we keep being told about?Loading…
