Personal Income And Spending Miss Expectations

Inflation rose in-line with expectations in October while personal income and spending missed expectations.

The latest personal income and spending report from the BEA showed that spending and income rose less than expected, while inflation remained tepid, with PCE rising 0.1% month-on-month in October and “core” PCE rising 0.2%.

Expectations were for personal income to rise 0.4% with personal spending expected to rise 0.3%.

Both of those measures rose 0.2% in October.

PCE was expected to be flat month-on-month in October and rise 1.4% year-over-year, while “core” PCE, which excludes the more volatile costs of food and energy, was expected to rise 0.2% month-on-month and 1.5% year-over-year.

The BEA’s report on Wednesday showed that private wages and salaries rose 0.2% to $US18.8 billion in October, more than the $US13.9 billion increase in September, but less than the 0.4% increase that was expected.

Meanwhile, personal outlays — PCE, personal interest payments, and personal current transfer payments — increased $US26.3 billion in October, compared with an increase of $US8.7 billion in September.

PCE, rather than CPI, is the Federal Reserve’s preferred measure of inflation.

Last month, personal spending fell 0.2% and personal income rose 0.2%, while core PCE rose 0.1% month-on-month.

More to come …

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