Personal income for Americans rose by 0.2 percent in September, according to a new report from the U.S. Department of Commerce. That was half the gain economists anticipated but still the 31st monthly increase in a row. Wages and salaries also lifted by only 0.2 percent in September, and real (inflation-adjusted) disposable income advanced by just 0.1 percent, the weakest reading in five months. Despite disappointing wage growth, personal spending, which accounts for roughly 70 percent of the U.S. economy (GDP), increased by 0.4 percent in September.
That was in line with forecasts and the prior month’s gain was revised higher. However, the personal saving rate, i.e. personal saving as a percentage of disposable personal income, fell to just 6.2 percent. That matched the lowest level of saving since 2013 and adds more support to the argument that faster wage gains will be needed to sustain consumer spending going forward. On the bright side, the Federal Reserve’s preferred measure of household inflation, also included in this report, rose at a slightly slower pace in September. Some investors hope that the softer inflation data, along with recent volatility in the stock market, will cause Fed officials to reconsider their plans for another interest rate hike at the December monetary policy meeting.
Sources: Econoday, U.S. DoC, FRBSL
Post author: Charles Couch