Personal income and spending for September

While I was away . . . Personal income and spending for September

Real personal spending increased +0.3% in September, while real income increased less than 0.1%, rounding to unchanged:

Since May 2021, after the last round of pandemic stimulus expired, real spending is up 3.3%; but real income is down -2.0%:

Real personal spending had stalled in late spring and summer, but in the last two months – aided by revisions – has increased significantly. Similarly, real personal income had been declining almost relentlessly since spring 2021, but after revisions in the last three months has rebounded by 0.7%.

As a byproduct, the personal saving rate declined -0.3% during the month to 3.1%, its lowest in the past 15 years except for June (graph subtracts -3.1% so that current value shows as 0):

As with so much other data, the recent decline in gas prices has improved consumers’ lots significantly.

Finally, here’s a comparison of real personal spending and real retail sales, essentially two side of the same coin. In the last few months there has been some commentary that spending has switched from goods (represented more in retail sales) to services (represented relatively more in spending). The monthly comparisons seem to bear this out:

Real retail sales have declined in every month since April except for August, while as indicated above real spending has rebounded in the past several months.

In summary, consumer spending is holding up, but with very little in the way of a savings cushion, leaving consumers very vulnerable to any further shock.

August personal income and spending: major downward revisions overwhelm modestly positive monthly gains,”