US: Overall consumer spending growth should remain solid – Wells Fargo

According to analysts at Wells Fargo, the 0.6% monthly pickup in personal spending is the latest sign that there is still some spring in the step of the US consumer heading into the final stretch of the year. They explained that the fact that last month's spending increase was revised higher by two-tenths of a percent actually makes today's report a slightly better than expected outcome.

Key Quotes: 

“Despite a transition from transfer payments to wages that held back income growth in September, consumer spending still rose 0.6%, which was spot-on expectations. The fact that last month's spending increase was revised higher by two tenths of a percent actually makes today's report a slightly better than expected outcome.”

“Coming off of yesterday's GDP report, which showed only tepid consumer spending growth, the additional detail we get from today's personal income and spending report reveals that Q3 finished strong in August and September. As we describe in detail below, the long anticipated transition to services spending came at the cost of a sharp slowing in goods spending.”

“Looking ahead, we expect more payback may be in order for goods consumption, but with more and more services spending coming back online amid a decline in COVID cases, overall consumer spending growth should remain solid.”