October Personal Income was up 0.2% in its smallest gain since April, and Personal Consumption Expenditures gained just +0.2% as well.
PCE core prices posted +0.2% for +1.9% over the year, up from +1.8% in September. The up-creep in prices probably reflects energy pass-through but illustrates inflation risks. These likely will abate if the economy slows. An inflation rate of under 2% is generally thought to be acceptable to Federal Reserve officials.
The personal savings rate 0.5%, a sort of 'mid-range’ reading. So far this year, the savings rate has remained positive despite some slower readings for income.
Real PCE growth was unchanged, a very poor start for Q4 spending that suggests the economy is slowing. November and December activity, and especially Christmas sales, will determine whether Q4 consumption gains. But so far, the outlook is poor.
The October real spending breakdown showed -0.6% in durables and -0.1% in nondurables. While the former might be explained by the introduction of higher-priced new autos, the drop in nondurables and the mere +0.1% in real services spending are troubling.