WASHINGTON (MNI) – Friday morning’s August Personal Income and
Spending report is expected to see spending rose 0.4% for the second
month, according to a survey of economists by Market News International.
David Resler of Nomura Securities said, “Better retail sales data
are pointing to a recovery in consumer spending and higher gas prices
should boost the number too.” August retail sales, released on September
14, also showed a rise of 0.4%. Ex-autos, August retail sales jumped
0.6%.
The same MNI survey forecasts personal income to rise 0.2% for the
second month in a row.
Meanwhile, core PCE inflation month-over-month is predicted to inch
up 0.1% following an identical 0.1% gain previously. Core PCE inflation
year-over-year, the Federal Reserves preferred inflation gauge, has
risen only 1.4% through each of the last two months. This remains below
the Feds implicit inflation target of 1.5% to 2.0% and has prompted
many in the markets to believe more Fed asset purchases are coming.
The most recent FOMC statement noted, “The Committee will continue
to monitor the economic outlook and financial developments and is
prepared to provide additional accommodation if needed to support the
economic recovery and to return inflation, over time, to levels
consistent with its mandate.”
Philadelphia FED President Plosser, a noted hawk, admitted he would
consider asset purchases only if deflation materializes. In a speech
Wednesday he said, “I would support appropriate steps to
raise expectations of inflation, including, perhaps, aggressive asset
purchases coupled with clear communication that our goal is to combat
deflationary expectations.” Otherwise, he said he does not see how more
asset purchases would help hiring.
— Kenneth Fung is a Washington reporter for Need to Know News
** Market News International Washington Bureau: 202-371-2121 **
[TOPICS: MAUDS$,M$U$$$]
