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 Rose 0.4% in September
Posted Under: Data Watch • PIC
Supporting Image for Blog Post

 

Implications:  Consumer spending surged in September at the fastest pace for any month since 2009, led by a storm-induced pickup in auto sales.  Along with autos, gasoline and household utilities also showed large increases in a month where most categories of spending rose. Incomes, meanwhile, increased 0.4% in September, led by an increase in private-sector wages and salaries.  Government transfers, which rose in August due to a temporary boost in government checks like FEMA disaster assistance payments, showed a minor increase in September.  In the past year, personal income is up 3.0% while government benefits are up 2.7%.  As the economy continues to clear the effects of Harvey and Irma, we expect faster growth in income with gains tilted toward the private-sector.  While spending outpaced income growth in September, 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 0.4% in September and is up 1.6% in the past year.  By contrast, a year ago in September 2016, the 12-month change for prices was 1.4%; in September 2015, it was up a meager 0.2%.  In other words, we think inflation is still in a long-term accelerating trend.  As a result, we expect the Federal Reserve to raise rates in mid-December and continue on the path of gradual rate hikes in 2018. 

Click here for PDF version

Posted on Monday, October 30, 2017 @ 10:39 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.
 
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.