This Labor Day weekend will mark the unofficial end of summer. Befittingly, next week’s economic news is all about the Jobs Report. But today we’re talking about the results of our jobs: how much we earn, spend, and save.
The report on Personal Consumption Expenditures came in at an annualized 2.6%, slightly lower than expectations. The three month rolling average is much tamer at a mere 1.7%, proving that the restrictive measures that have been implemented now for over two years are having the desired effect on the war against inflation. The Fed, and you and me, should be happy with this news and the consequential relief on our respective budgets.
Moving on, Personal Income increased 0.3% this month, above the 0.2% seen last month and also higher than expectations. More earnings makes it easier to pay for stuff. Today’s numbers are mildly inflationary, though not enough to squabble over. Personal Spending also increased from 0.3% last month to the current 0.5%. Also inflationary, and illustrating that we are once again spending more than we are earning.
The bullet point that pulls the spotlight away from those stats is the Personal Savings Rate, which dropped to a 16 year low of 2.9% and down markedly from last month’s 4.0%. Where the focus of the economy will be shifting away from inflation and focusing on keeping the economy running smoothly in the face of a pending recession, the propensity to save money as a safeguard against a slowdown is critical.
Heading into a three day weekend, bonds are quiet despite the interest-rate-friendly news published today, and next week should be quiet as well leading into Friday’s Jobs Report. Have a fantastic weekend!
