Here we go again with two data points showing different results
The consumer has been a strong part of the US recovery, if you believe most of the Fed heads. Inflation is getting back towards their target too.
Well, here we go again in data dependent land where one is a winner and the other a loser.
The core PCE number is edging closer to 2%, and even the 2 pip lift in the deflator is good news. Then we see spending lower and incomes lower.
Wages were 0.1% vs 0.5% in July and disposable income rose 0.2% vs 0.4% in July. Those numbers weren't strong in July anyway but they look worse now, and particularly when every data point counts for the next hike.
Spending fell in durables (-1.3% vs 2.3% prior) and non-Durables (-0.2% vs -0.6% prior). That doesn't smack of a strong consumer.
The Fed are going to have to work hard for their hike, given the way the data keeps coming out, and that's something I've been highlighting for a while. Until we get nearly all the data pulling in the right direction, the Fed is in a bind.
Overall, the dollar has softened on the income/spending numbers and inflation is playing second fiddle.
