Consumer making a moderate recovery in October: Income rose .5%

The consumer is making a moderately strong comeback in October in both income and spending. Meanwhile, core inflation is subdued and still too low for Fed comfort.

Personal income in October posted a healthy 0.5% rise.  Importantly, the wages & salaries component jumped 0.6%, following a 0.1% the previous month.

Household spending also showed strength. Personal consumption expenditures rose 0.4%, following a 0.3% increase in September. For the latest month, strength was led by a 1.9% monthly spike in durables. Nondurables advanced 0.8% and services edged up 0.1%.
Year on year, personal income for October came in at up 4.1 percent, compared to 3.7 percent in September. PCEs growth slipped to 3.6 percent in October from 3.8 percent in September.

PCE inflation nudged up at the headline level but the core remained anemic. The PCE price index increased 0.2% in October. The core rate was flat for the second month in row.
Relative to typical recoveries, the rebound in income in income and spending is still sub-par but at least we are seeing some strengthening. Retailers should be happy that the trend is up.


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