US: Consumer spending still on track to be supportive of growth in Q4 – Wells Fargo

Data released on Friday, showed an increase in consumer confidence in December and also in consumer income and spending in November. Analysts at Wells Fargo, point out that with income growing, consumers are able to increase spending and still save. 

Key Quotes: 

“Consumers are in bright spirits and it could not come at a better time for retailers at the height of the critical holiday shopping season. Consumer sentiment rose to 99.3, the second highest reading of the year.  Spirits aren’t the only thing rising either, the latest personal income figures posted a solid 0.5% increase in November led higher by a 0.4% increase in wages and salaries.”

“Personal spending rose 0.4% marking the ninth straight monthly increase.”

“With two months now on the books for the fourth quarter, it looks as though consumer spending is still on track to be supportive of growth in the fourth quarter, though the pace of personal outlays is apt to moderate slightly.”

“Confidence is trending higher, but both the University of Michigan and the Conference Board’s measures are below where they were at their 2018 highs.”

“The PCE deflator shows year-over-year inflation of roughly 1½% on both the headline and the core measure. The headline figure will rise next year due to the timing of the slide in oil prices, but on balance the inflation picture should remain supportive of the Federal Reserve remaining on hold.”