Today's Report (11/24/2021)

U.S. consumer spending rebound in October, rising by a solid 1.3%, but inflation was up as well, rising over the past year at the fastest pace in more than three decades.

Personal income increased $93.4 billion (0.5%) in October according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $63.0 billion (0.3%) and personal consumption expenditures (PCE) increased $214.3 billion (1.3%).

Real DPI decreased 0.3% in October and Real PCE increased 0.7%; goods increased 1.0% and services increased 0.5%. The PCE price index increased 0.6%. Excluding food and energy, the PCE price index increased 0.4%.

The PCE price index for October increased 5.0% from one year ago, reflecting increases in both goods and services. Energy prices increased 30.2% while food prices increased 4.8%. Excluding food and energy, the PCE price index for October increased 4.1% from one year ago.

Market Reaction

Following the consumer spending release, the S&P500 saw some movement towards the upside.

Consumer Spending

What is it?

Records how much American consumers spend. The average household spends 95 cents of every dollar they earn. This fuels ⅔ of the economy. It is the largest component of GDP.
Durable Goods, non-durable goods, and services are included

What are the fundamental effects?

Consumer expenditures are the main driving force of sales, imports, factory output, business investments, and job growth in the US.

US Personal Income

What is it?

Personal income refers to all incomes in a country. Including a number of sources like salaries and dividends.

What are the fundamental effects?

Personal income has a large effect on consumer consumption. If incomes rise, it shows the US economy is becoming stronger as people have more money to spend on goods. However, if personal incomes decline, then this could show a weakening economy as consumers are less inclined to buy goods and would rather save their wealth.

How does it affect the markets?

CURRENCY - A healthy increase in personal incomes and spending bodes well for the US dollar. High consumer demand encourages more growth and puts upward pressure on interest rates.

STOCKS - Higher personal income and spending are viewed favorably in the stock market because they fuel more economic activity and fatten corporate profits.

BONDS - Any data that affirms sluggishness in the economy is expected to support higher bond prices and lower yields.