{"id":1353,"date":"2018-09-28T13:28:07","date_gmt":"2018-09-28T17:28:07","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=1353"},"modified":"2018-09-28T13:28:07","modified_gmt":"2018-09-28T17:28:07","slug":"august-consumer-spending-and-income-and-september-consumer-confidence","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1353","title":{"rendered":"August Consumer Spending and Income and September Consumer Confidence"},"content":{"rendered":"

KEY DATA:<\/u><\/strong> Consumption: +0.3%; Disposable Income: +0.3%; Inflation: +0.1%; Ex-Food and Energy: 0%\/ Consumer Sentiment: +3.9 points<\/p>\n

IN A NUTSHELL:<\/u><\/strong> \u00e2\u20ac\u0153Consumers are exuberant and that is translating into some pretty good spending.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/u><\/strong> Third quarter growth is becoming clearer as more data come in and it will be good, just not great. Household spending was solid in August, led by a surge in services. This was expected as utilities are in the services category and it was a brutally hot month in many parts of the country.<\/em><\/strong> Don\u00e2\u20ac\u2122t expect that to be repeated in September. Vehicle sales were soft and that led to a decline in durable goods spending. Nondurables were up, which says people are buying lots of different things. So far this quarter, consumption is growing at a better than 3% pace, which means overall economic growth should be at least that high. As for income, there was a decent but not robust rise in wages and salaries.<\/em><\/strong> There seems to finally be a bit of an upward trend in this category, but not yet a strong one. On the inflation front, there really isn\u00e2\u20ac\u2122t a lot. The rate is above 2% for all measures, but it is not accelerating.<\/em><\/strong> That is good news and it supports the Fed view that it looks like we are not headed to an upside shock on inflation.<\/p>\n

Consumer\u00e2\u20ac\u2122s are in a great mood. The University of Michigan\u00e2\u20ac\u2122s Index of Consumer Sentiment rose solidly in September and it the level was above 100 for only the third time since mid-2004.<\/em><\/strong> Views on current conditions jumped while expectations rose more moderately. Interestingly, upper income households are becoming more cautious while low-income respondents indicated that they are more positive about the conditions.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/u><\/strong> Today\u00e2\u20ac\u2122s economic numbers were very solid.<\/em><\/strong> How much of the consumer spending was due to utilities is unclear, but don\u00e2\u20ac\u2122t expect service demand to be nearly as high in September. Since services comprise about two-thirds consumer demand, that implies we could see a more modest number. We still need to see faster income growth to support the very solid spending we saw in the spring and likely during the summer. I am not sure if that will emerge and if not, we could be looking at a softer fourth quarter number.<\/em><\/strong> But investors are not likely to worry until they see softer numbers. The economy is evolving in a manner that is consistent with the Fed\u00e2\u20ac\u2122s slow but steady rate hike\/balance sheet reduction strategy. It will likely continue on that path over the next year. <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Consumption: +0.3%; Disposable Income: +0.3%; Inflation: +0.1%; Ex-Food and Energy: 0%\/ Consumer Sentiment: +3.9 points IN A NUTSHELL: \u00e2\u20ac\u0153Consumers are exuberant and that is translating into some pretty good spending.\u00e2\u20ac\u009d WHAT IT MEANS: Third quarter growth is becoming clearer as more data come in and it will be good, just not great. Household … Continue reading August Consumer Spending and Income and September Consumer Confidence<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1353","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1353"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1353\/revisions"}],"predecessor-version":[{"id":1354,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1353\/revisions\/1354"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}