The Commerce Department’s report on personal income and spending has been released for the month of August, and it shows the largest gains in six months. Income rose by 0.1% and spending rose by 0.5%.
On personal income, Dow Jones and Bloomberg were both calling for an increase of 0.2%. On personal spending, Bloomberg expected a gain of 0.5%.
What matters here is something simple. The market just needed to see that these were up for the month. Whether it was going to be slightly above or slightly below did not matter much. With consumer spending coming to about two-thirds of gross domestic product, it is important to see what the actual behavior is outside of the confidence indicators.
One consideration is that spending would have been up only 0.1% if you factor in inflation. That is still positive, but it is less positive than the “only need to see positive” data explanation. Savings also slid marginally to 3.7% of disposable income, versus a prior 4.1%.
JON C. OGG
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