{"id":1605,"date":"2019-09-27T12:28:23","date_gmt":"2019-09-27T16:28:23","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1605"},"modified":"2019-09-27T12:28:23","modified_gmt":"2019-09-27T16:28:23","slug":"august-consumer-spending-and-income-durable-goods-orders-and-september-consumer-sentiment","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1605","title":{"rendered":"August Consumer Spending and Income, Durable Goods Orders and September Consumer Sentiment"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Consumption: +0.1%; Income: +0.4%; Prices,\nEx-Food and Energy (Over-Year): +1.8%\/ Orders: +0.2%; Ex-Aircraft: +0.5%; Capital\nSpending: -0.2%\/ Sentiment: +3.4 points<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cHouseholds have the money to spend, but it\nisn\u2019t clear they will continue spending it at a robust pace.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  The broad shoulders of the consumer keeps\nbulking up on growing income, but they still need to spend it and in August at\nleast, that didn\u2019t happen at a very solid pace.<\/em><\/strong>  Consumption rose modestly in despite strong\ndurable goods demand.  Nondurable\npurchases were soft while services, which make up about two-thirds of all\nspending, rose moderately.  In addition,\nthe robust July gain, was revised downward a touch.  Will spending rebound?  If income is the driver, the answer is\nyes.  Wages soared in August<\/em><\/strong>.  They had slowed in July, which was likely an\naberration.  The combination of strong income\ngains and modest spending led to a rise in the savings rate.<\/em><\/strong>  Households are stashing funds away for a\nrainy day.  On the inflation front, overall\nprices went nowhere.  Excluding food and\nenergy they rose modestly, but over the year, the increase is approaching the\nFed\u2019s 2% target.<\/em><\/strong><\/p>\n\n\n\n

As for businesses, durable goods demand rose\nsolidly, if you exclude aircraft.  But\nthe key figure in this report is the capital spending number and that was down.<\/em><\/strong>  That was not expected and it speaks to the\nhigh level of uncertainty gripping corporate leaders.  Backlogs rose a little, but nothing to lead\none to believe that production will surge anytime soon.<\/p>\n\n\n\n

Looking forward, consumer attitudes will play a\nlarge role in the extent to which growth slows. \nThe Conference Board reported earlier this week that confidence cratered\nin September.  However, the University of\nMichigan\u2019s Consumer Sentiment Index ticked up during the month.<\/em><\/strong>  Still, all is not good in consumer land.  As the report noted: \u201cDespite the high levels of confidence, consumers have also expressed\nrising levels of economic uncertainty<\/em>.\u201d \nPolitical issues don\u2019t usually have a lasting impact on household spending,\nbut fears about jobs or incomes do.  So\nwe need to watch this carefully.MARKETS AND FED POLICY IMPLICATIONS:<\/strong>Chair\nPowell needs some data to fight off the insurrection that seems to be building\nat the Fed.  Today\u2019s data only muddies\nthe waters.<\/em><\/strong>  Income is solid but\nspending may be moderating.  Businesses\nare not investing but given the rise in durable goods orders, manufacturing\ndoesn\u2019t look to be falling apart.  We\nseem to be on track for another roughly 2% GDP gain for the third quarter, which\nmay seem bad but it is trend growth.<\/em><\/strong> \nAnd the Fed\u2019s inflation figure, if you consider the non-food and energy\nnumber, is nearly at target.  Next week\nwe get the September employment report and I suspect it will be decent but not\ngreat as well.  That is, it will signal even\nmore 2% growth.  So, what will the Fed do?  I have it sitting tight until it sees that\nthere really is a downturn brewing. \nRight now, that is not the case, even if the risks remain to the downside.  <\/em><\/strong>Actually, the risks could be\nrising.  No one knows how the president\nwill react to the impeachment process, but if he lashes out by raising tariffs\nto show he is boss, then we could be in real trouble.  But that is conjecture, which is really all\nwe have to go on right now.      <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Consumption: +0.1%; Income: +0.4%; Prices, Ex-Food and Energy (Over-Year): +1.8%\/ Orders: +0.2%; Ex-Aircraft: +0.5%; Capital Spending: -0.2%\/ Sentiment: +3.4 points IN A NUTSHELL:  \u201cHouseholds have the money to spend, but it isn\u2019t clear they will continue spending it at a robust pace.\u201d WHAT IT MEANS:  The broad shoulders of the consumer keeps bulking … Continue reading August Consumer Spending and Income, Durable Goods Orders and September Consumer Sentiment<\/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":[1],"tags":[],"class_list":["post-1605","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1605","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=1605"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1605\/revisions"}],"predecessor-version":[{"id":1606,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1605\/revisions\/1606"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1605"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1605"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1605"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}