Posts tagged Inflation
Personal Income & Personal Consumption Expenditures
Personal income has trended lower in recent months, which has kept a lid on spending according to a report released last week by the U.S. Bureau of Economic Analysis. Personal income fell 0.1 percent in August compared with July. Wage income, an important component of personal income, fell 0.2 percent, not surprising in light of the weak labor market. Personal consumption expenditures managed a weak gain of 0.2 percent last month as consumers trimmed their savings rate in order to continue spending. Real (inflation-adjusted) expenditures were flat, however, as inflation rose 0.2 percent.
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Consumer Confidence
Under normal circumstances, consumer confidence surveys are not very informative. They do not correlate well with consumer spending because consumers respond to what is going on rather than driving it. But in the “new normal,” consumer and business confidence appears to be playing an unusually large role in the recent bout of economic and financial market weakness. The S&P 500 plunged sharply during the first several trading days in August when the debt ceiling standoff was coming to a head, and it has been...
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