Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Personal Income Rose 0.4% in October
Posted Under: Data Watch • PIC

 

Implications: Consumers enjoyed rising wages and healthy spending in October, following a storm-boosted September report. Consumer spending rose 0.3% in October, a slower pace of spending growth than we saw in September, but remember that September spending was boosted by the replacement of vehicles destroyed by hurricanes Harvey and Irma. Spending in October - led by housing, groceries, and prescription drugs – came despite a headwind from slower auto and gasoline sales. Meanwhile incomes rose 0.4% in October, led by private sector wages & salaries as well as interest income. Both incomes and spending have been heating up in recent months, with income rising at a 4.2% annual rate in the past three months, and spending up at a 5.5% annual rate over the same period. We expect to see healthy growth in the coming months, especially if meaningful tax cuts and reform come out of Washington. While some will bemoan that spending has outpaced income growth in the past few months, and has risen at a faster pace in the past year, stories about problems with the consumer are way overblown. Yes, consumer debts are at a record high in raw dollar terms, but so are consumer assets. Comparing the two, debts are the lowest relative to assets since 2000 (and that's back during the internet bubble when asset values were artificially high). Meanwhile, the financial obligations ratio - which compares debt and other recurring payments to income – is still hovering near the lowest levels of the past 35 years. In other words, consumers still have room to increase spending, and steadily rising incomes will continue to boost spending power in the months ahead. On the inflation front, the overall PCE deflator rose 0.1% in October and is up 1.6% in the past year. While that is modestly below the Fed's 2% inflation target, the pace of inflation has been rising in recent months and provides clear backing for the Fed to continue with rate hikes. In other news this morning, the Chicago PMI, which measures manufacturing sentiment in that region, fell in November to a still strong 63.9. Plugging this into our model along with other recent data, we expect tomorrow's national ISM Manufacturing index to show continued robust growth for November. In employment news this morning, new claims for jobless benefits fell 2,000 last week to 238,000. Meanwhile, continuing claims rose 42,000 to 1.96 million. Look for another solid month of job growth in November.

Click here for PDF version

Posted on Thursday, November 30, 2017 @ 11:50 AM • Post Link Share: 
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.
 
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 advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.