{"id":361,"date":"2014-10-31T09:13:19","date_gmt":"2014-10-31T13:13:19","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=361"},"modified":"2014-11-01T14:07:47","modified_gmt":"2014-11-01T18:07:47","slug":"september-consumer-spending-income-and-third-quarter-employment-cost-index","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=361","title":{"rendered":"September Consumer Spending, Income and Third Quarter Employment Cost Index"},"content":{"rendered":"

KEY DATA:<\/strong> Consumption: -0.2%; Income: +0.1%\/Employment Costs (Year-over-Year): +2.2%; Wages and Salaries: +2.1%; Private Sector: +2.3%<\/p>\n

IN A NUTSHELL:<\/strong> \u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153Household incomes are finally starting to rise but there is no rush to spend it.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/strong> \u00c2\u00a0Yesterday\u00e2\u20ac\u2122s strong GDP report pretty much told us what happened with consumer spending during the summer and today\u00e2\u20ac\u2122s report fills in the details about the monthly pattern.\u00c2\u00a0 Very simply, there is no pattern.\u00c2\u00a0 Consumption was flat in July, soared in August and fell in September.\u00c2\u00a0 Part of that was a robust return to vehicle demand in August, which skewed the trend.\u00c2\u00a0 But there were also ups and downs in the services and the nondurables components, so it is really hard to know what people have been thinking. <\/em><\/strong>\u00c2\u00a0The real issue, though, is can they afford to spend more.\u00c2\u00a0 Two bits of information point to increases in incomes, but nothing great just yet.\u00c2\u00a0 Personal income was up in September, but when adjusted for inflation, it was largely flat.\u00c2\u00a0 <\/em><\/strong>That is, purchasing power went nowhere.\u00c2\u00a0 Disturbingly, wages and salaries, the key to both spending and Fed policy, rose minimally during the month.\u00c2\u00a0 That is important because the wage and salary component of the Employment Cost Index, <\/em><\/strong>an aggregate measure of compensation, has been accelerating.<\/em><\/strong>\u00c2\u00a0 In the third quarter, private sector wages and salaries rose at the fastest pace in six years.\u00c2\u00a0 Hopefully, the September moderation was just an aberration. \u00c2\u00a0We need greater increases in household incomes if the strong economic growth we have seen for the past two quarters can be sustained.\u00c2\u00a0 Inflation remains totally under control. <\/em><\/strong><\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/strong> Fed Chair Yellen is looking for any sign that the tightening labor markets are finally causing wages to rise<\/em><\/strong>.\u00c2\u00a0 That is not happening just yet, but the trend is in that direction.\u00c2\u00a0 Worker compensation, especially in the private sector, is accelerating. <\/em><\/strong>\u00c2\u00a0It is not so high just yet that warning bells are being set off at the Fed, but another six months and we should be there. <\/em><\/strong>\u00c2\u00a0But the sluggish rise in wages in September is a warning that the pattern will not be clear-cut until employers start bidding for workers.\u00c2\u00a0 Right now, that is happening only in a few industries, occupations and regions.\u00c2\u00a0 It needs to be more widespread.\u00c2\u00a0 The limited income gains imply that spending will continue to grow moderately at best.<\/em><\/strong>\u00c2\u00a0 We need that to change if we are to get this economy into high gear.\u00c2\u00a0 The key may be the holiday shopping season and if the consumer confidence numbers are any indicator, it could be really good.\u00c2\u00a0 Today we saw the Thompson Reuters\/University of Michigan\u00e2\u20ac\u2122s Consumer Sentiment Index hit its highest level in over seven years.<\/em><\/strong>\u00c2\u00a0 That came after the Conference Board\u00e2\u20ac\u2122s Confidence Index also hit a seven-year high.\u00c2\u00a0 Consumers are feeling good and it will only take a little more money to get spending to surge.<\/em><\/strong>\u00c2\u00a0 As for the markets, it looks like investors actually think that economic fundamentals, not the Fed, will drive prices and if that is the case, people should be feeling pretty good right now.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Consumption: -0.2%; Income: +0.1%\/Employment Costs (Year-over-Year): +2.2%; Wages and Salaries: +2.1%; Private Sector: +2.3% IN A NUTSHELL: \u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153Household incomes are finally starting to rise but there is no rush to spend it.\u00e2\u20ac\u009d WHAT IT MEANS: \u00c2\u00a0Yesterday\u00e2\u20ac\u2122s strong GDP report pretty much told us what happened with consumer spending during the summer and today\u00e2\u20ac\u2122s … Continue reading September Consumer Spending, Income and Third Quarter Employment Cost Index<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47,3,32],"tags":[],"class_list":["post-361","post","type-post","status-publish","format-standard","hentry","category-consumer-spending-and-income","category-economic-indicators","category-employment-cost-index"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/361","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=361"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/361\/revisions"}],"predecessor-version":[{"id":362,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/361\/revisions\/362"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}