Just looking through the tables for a feel of the numbers and durables continue to show a decent gain. They rose 1.9% from 1.0% in October and from -1.2% in September. Non durables wasn’t as pretty falling 1% from +0.4% to -0.4% in Oct while services rose to 0.6% from 0.3%. Savings rates have been on the slide and fell further to 4.2% from 4.5% in Oct and 5.1% in Sept.
On the income side wages were up 0.4% from 0.1% and disposable income was 0.1% from -0.2% in Oct. As I said in the data post it’s still a very poor picture in wages.
The Fed will want to see some of the jobs gain reflected in wages as that will be one of the main drivers of inflation. At the moment that’s not really being borne out in the numbers. They’ll be fearful of any sudden jump in wages but that’s unlikely to happen. The country isn’t returning to the good old days just yet and despite the pick up in consumer spending these numbers tell us that main street is still very much vary of over committing itself to a recovery. That’s no bad thing as it can keep the lid on debt but if more unemployed are finding work then the economy will need to see those people spending also.
All this could put the Fed in a sticky spot as they may see job gains but weakness still in the economy, which may reflect in lower inflation. The pleasures of being a central bank eh? Stuffed if it works and stuffed if it doesn’t.
