Friday, September 27th, 2024
We have a full Personal Consumption Expenditures (PCE) report out this morning. As you may know, PCE is the preferred metric of inflation the Fed uses. Its late entry in the data calendar means it consumes other segmented data from throughout the past month. And as such, it usually requires fewer revisions to previous months.
Pre-markets were in the green ahead of the PCE release, and remain so in the minutes afterward. But we’re at fairly tepid levels to start the last trading day of the week: the Dow is +35 points, the S&P 500 +2 and the Nasdaq +14 points. Bond yields are +3.77% on the 10-year, +3.60% on the 2-year.
PCE Personal Income and Spending Cools
August
Personal Income came in only half as high as projected: +0.2% from the +0.4% estimate, down from the previous month’s +0.3%. The June print earlier this month also registered +0.2%, but aside from that, this is the lowest monthly read on personal American worker income since October of last year.
Personal Spending last month also was light of expectations: +0.2%, from the +0.3% estimate and +0.5% from the previous month. So clearly we’re seeing a shrinking consumer appetite as of the last month before the Fed started cutting interest rates for the first time in three-and-a-half years. Real Spending — adjusted for inflation — came in at +0.1% last month, the lowest level since the 0.0% posted in April.
PCE Index In-Line, Core Mixed
On headline PCE month over month, August brought in +0.1%, as expected, and below the +0.2% in July. The last time we were above +0.3% in headline PCE was back in January. Year over year, +2.2% is the August headline number, 10 basis points (bps) below expectations and the slimmest number since +1.9% back in February of 2021!
The core PCE read month over month also reached +0.1%, below the +0.2% analysts were looking for. Back in January, we were up at +0.5%. Core PCE year over year came in as expected, +2.7%, which is actually 10 bps above where we were a month ago. Near-term low was the +2.6% from May through July of this year. Because the Fed is interested in bringing inflation rates down to +2.0%, we hope we are not already off the trough here.
Overall, these figures are consistent with tamed inflation. The only outlier is the core year-over-year number, but even there we see only the first upward tick month over month since January of 2023, when we were up at +4.9%. “Soft landings” could only look moderately more “soft” than these PCE numbers this morning.
Other Economic Data This Morning: Trade Balance, Wholesale
Advanced
U.S. Trade Balance for August sank to its lowest level since May 2022: -$102.8 billion, down a smidge from the -$102.7 billion reported a month ago. Advanced
Wholesale Inventories in August were in-line at +0.2%, with
Real Inventories +0.5% — also in-line with expectations.
After Today’s Opening Bell on the Stock Market
Final
Consumer Sentiment for September numbers are out later this morning. Expectations are for a slight improvement to 69.3 from 69.0 a month ago. This is off year-to-date lows from July of 66.4, and still a ways from one-year highs of 79.40 from March of this year. We have yet to get near the pre-Covid levels over 100 on consumer sentiment.
Questions or comments about this article and/or author? Click here>>
Image: Bigstock
PCE In-Line, Income and Spending Lower in August
Friday, September 27th, 2024
We have a full Personal Consumption Expenditures (PCE) report out this morning. As you may know, PCE is the preferred metric of inflation the Fed uses. Its late entry in the data calendar means it consumes other segmented data from throughout the past month. And as such, it usually requires fewer revisions to previous months.
Pre-markets were in the green ahead of the PCE release, and remain so in the minutes afterward. But we’re at fairly tepid levels to start the last trading day of the week: the Dow is +35 points, the S&P 500 +2 and the Nasdaq +14 points. Bond yields are +3.77% on the 10-year, +3.60% on the 2-year.
PCE Personal Income and Spending Cools
August Personal Income came in only half as high as projected: +0.2% from the +0.4% estimate, down from the previous month’s +0.3%. The June print earlier this month also registered +0.2%, but aside from that, this is the lowest monthly read on personal American worker income since October of last year.
Personal Spending last month also was light of expectations: +0.2%, from the +0.3% estimate and +0.5% from the previous month. So clearly we’re seeing a shrinking consumer appetite as of the last month before the Fed started cutting interest rates for the first time in three-and-a-half years. Real Spending — adjusted for inflation — came in at +0.1% last month, the lowest level since the 0.0% posted in April.
PCE Index In-Line, Core Mixed
On headline PCE month over month, August brought in +0.1%, as expected, and below the +0.2% in July. The last time we were above +0.3% in headline PCE was back in January. Year over year, +2.2% is the August headline number, 10 basis points (bps) below expectations and the slimmest number since +1.9% back in February of 2021!
The core PCE read month over month also reached +0.1%, below the +0.2% analysts were looking for. Back in January, we were up at +0.5%. Core PCE year over year came in as expected, +2.7%, which is actually 10 bps above where we were a month ago. Near-term low was the +2.6% from May through July of this year. Because the Fed is interested in bringing inflation rates down to +2.0%, we hope we are not already off the trough here.
Overall, these figures are consistent with tamed inflation. The only outlier is the core year-over-year number, but even there we see only the first upward tick month over month since January of 2023, when we were up at +4.9%. “Soft landings” could only look moderately more “soft” than these PCE numbers this morning.
Other Economic Data This Morning: Trade Balance, Wholesale
Advanced U.S. Trade Balance for August sank to its lowest level since May 2022: -$102.8 billion, down a smidge from the -$102.7 billion reported a month ago. Advanced Wholesale Inventories in August were in-line at +0.2%, with Real Inventories +0.5% — also in-line with expectations.
After Today’s Opening Bell on the Stock Market
Final Consumer Sentiment for September numbers are out later this morning. Expectations are for a slight improvement to 69.3 from 69.0 a month ago. This is off year-to-date lows from July of 66.4, and still a ways from one-year highs of 79.40 from March of this year. We have yet to get near the pre-Covid levels over 100 on consumer sentiment.
Questions or comments about this article and/or author? Click here>>