Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  Personal Income Increased 0.3% in September
Posted Under: Data Watch • PIC
Supporting Image for Blog Post

 

Implications:  Another solid month of income and spending gains for consumers.  No sign of a recession here, not even close.  Consumer spending grew 0.5% in September, hitting a new all-time record high.  "Real" (inflation-adjusted) consumer spending grew 0.3% in September, also hitting a record high, and is up a healthy 2.4% in the past year.  Meanwhile personal income grew 0.3% in September. The gain was led by a 0.4% increase in private-sector wages and salaries.  As the labor market keeps tightening, look for income growth to continue to accelerate, which means consumer spending will keep growing as well.  On the inflation front, the PCE deflator, the Fed's favorite measure, rose 0.2% in September.  Although it's only up 1.2% from a year ago, it was up only 0.2% in the year ending in September 2015, so inflation is accelerating.  In fact, in the past six months, these prices are up at a 2.1% annual rate, surpassing the Fed's publicly-stated 2% inflation target.  Meanwhile, the "core" PCE deflator, which excludes food and energy, is up 1.7% from a year ago.  We expect continued acceleration in year-ago comparison measures of inflation over the next several months.  Together with continued employment gains, these figures support the case for the Fed to stay on track for a December rate hike.  Look for a strong hint about that rate hike on Wednesday from the Fed.  The one consistent dark cloud in the income reports has been the data on government redistribution.  While unemployment compensation is the lowest since 2007, overall government transfers to persons are up 3.5% in the past year.  Before the Panic of 2008, government transfers – Medicare, Medicaid, Social Security, disability, welfare, food stamps, and unemployment insurance – were roughly 14% of income.  In early 2010, they peaked at 18.5%.  Now they're around 17%, but not falling any further.  Redistribution hurts growth because it shifts resources away from productive ventures and, among those getting the transfers, weakens work incentives.  That's why we have a Plow Horse economy, not a Race Horse economy.  In other news this morning, the Chicago PMI, a measure of manufacturing sentiment in that key region, declined to 50.6 in October from 54.2 in September.  We're forecasting that tomorrow's report on the national ISM Manufacturing index is roughly unchanged at 51.6, versus 51.5 in September.  

Click here for PDF version

Posted on Monday, October 31, 2016 @ 10:17 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
M2 and C&I Loan Growth
The First Estimate for Q3 Real GDP Growth is 2.9% at an Annual Rate
New Orders for Durable Goods Declined 0.1% in September
New Single-Family Home Sales Increased 3.1% in September
Rate Hikes Won't Matter
M2 and C&I Loan Growth
Growth Stepping Up
Existing Home Sales Increased 3.2% in September
Housing Starts Declined 9.0% in September
The Consumer Price Index Increased 0.3% in September
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.