October 31, 2005
Personal Income And Outlays: A Little Less Spending, A Little More Inflation
U.S. consumer spending dropped for a second month in September when adjusted for inflation, the first back-to-back decline in 15 years and a sign that rising fuel costs left Americans with less money for other purchases.
Personal spending adjusted for inflation, which strips away the rise in energy prices, fell 0.4 percent after falling 1 percent in August, the Commerce Department said today in Washington. Before the adjustment, spending rose 0.5 percent after a 0.5 drop in August. Incomes rebounded from a plunge in August caused by uninsured losses from Hurricane Katrina...
Because spending rose less than incomes, the saving rate improved to minus 0.4 percent from minus 1 percent the previous month.
The Dallas Fed has more detail on that inflation bit:
The trimmed-mean PCE inflation rate for September was an annualized 2.9 percent.
According to the BEA, the overall PCE inflation rate for September was 11.7 percent, annualized, while the inflation rate for PCE excluding food and energy was 2.4 percent.
The trimmed-mean statistic -- an alternative to the PCE excluding food and energy measure of core inflation -- increased at about the same, relatively high rate as in August. The result is that this measure of core is drifting north a bit faster than the more conventional "ex food and energy" statistic:
12-month PCE inflation
Apr May June July Aug Sep
PCE 2.9 2.5 2.2 2.6 3.0 3.8
food and energy 2.0 2.0 1.9 1.9 2.0 2.0
Trimmed mean 2.2 2.1 2.1 2.1 2.2 2.3
At Angry Bear, Kash doesn't like the slowing growth and the fact that "the risk of a coming upturn in the core rate of inflation seems real." And who can blame him. On the other hand, we suspected that September was going to be a mess, and the news has generally been pleasantly mixed of late -- the October National Association of Purchasing Managers report from the Chicago area being a case in point. So tonight we'll just enjoy our sugar buzz, and wait to see what tricks or treats tomorrow (and the Institute for Supply Management manufacturing activity index) brings.
UPDATE: The Skeptical Speculator has more.
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