LONDON (SHARECAST) - US personal income and personal spending data from the Bureau of Economic Analysis has revealed that the average consumer’s financial situation is improving.
Personal income rose by 0.4% month-on-month, in line with the market consensus estimate. The previous month’s reading was 0.1% On a year-on-year basis, personal income rose 2.7% in the third quarter versus 4% in the previous quarter.
Personal spending rose by 0.8% month-on-month, 20 basis points more than expected and better than the previous month’s reading of 0.5%. In the third quarter, it rose 3.8% year-on-year compared to 2.2% a year earlier.
Savings as a percentage of disposable income fell to 3.3% from 3.7%.
The personal consumption expenditure price deflator, an inflation indicator that is closely followed by the Federal Reserve, was flat at 0.4% m/m and 1.7% y/y compared to 0.4% and 1.5% in the previous month respectively.
The core personal consumption expenditure price deflator was 0.1% m/m and 1.7% y/y compared to 0.1% m/m and 1.6% y/y.
"In terms of prices, the deflator is more or less stable. The Federal Reserve should focus on whether there are signs of inflation after the GDP deflator released last week showed a significant increase," said analyst Francisco Miñana from Digital Look.
"Regardless, we do not believe that the Fed will change its stance in monetary policy. [Fed Chairman Ben] Bernanke was clear on inflation not being a problem. Instead, he highlighted deflation and persistent unemployment as the main problems."
LONDON (SHARECAST) - US personal income and personal spending data from the Bureau of Economic Analysis has revealed that the average consumer’s financial situation is improving.
