Personal Income Rose 0.4% in November

Implications:  Personal income rose 0.4% in November, as both wages and government transfer payments contributed to more cash in consumers' pockets.  Following two months of declines as extended unemployment benefits ended and individuals returned to the workforce, government transfer payments rose in November as payments from the Provider Relief Fund (PRF), which sent checks to health care providers, more than offset declining payments from other programs.  Far more important (and sustainable) income gains came as private-sector wages and salaries rose 0.5% in November and are now up a whopping 9.7% in the past year.  And with extra funds to spend during the holiday season, consumption rose 0.6% in November, led by spending on services.  And spending growth should continue.  Job growth continues, wages are going up quickly, and some people saved transfer payments they received during COVID, giving them more (temporary) spending power.  On the inflation front, PCE prices grew 0.6% in November, and are up 5.7% from a year ago.  Core prices, which exclude food and energy, rose 0.5% in November and are up 4.7% from a year ago, supporting the Federal Reserve's recent decision to accelerate the pace of tapering in anticipation of raising rates in 2022.  In other news out this morning, durable goods orders jumped 2.5% in November and are up 14.7% in the past year.  Orders excluding transportation rose a very healthy 0.8% in November and are up 13.4% from a year ago.  One of the most important numbers for GDP purposes, shipments of non-defense capital goods excluding aircraft, rose 0.3% in November, and if unchanged in December, will be up at a 6.7% annualized rate in Q4 versus the Q3 average.  On the employment front, initial unemployment claims were unchanged at 205,000 last week. Meanwhile, continuing claims fell 8,000 to 1.859 million, a new low for the pandemic recovery.  Expect a solid payroll report for December.

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Posted on Thursday, December 23, 2021 @ 11:16 AM

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.