U.S. Personal Income Slumps 1.0% In September, Much More Than Expected
29 October 2021 - 8:16PM
RTTF2
A report released by the Commerce Department on Friday showed
personal income in the U.S. decreased by much more than expected in
the month of September.
The Commerce Department said personal income slumped by 1.0
percent in September after inching up by 0.2 percent in August.
Economists had expected personal income to edge down by 0.2
percent.
Disposable personal income, or personal income less personal
current taxes, also tumbled by 1.3 percent in September following a
0.1 percent uptick in August.
The bigger than expected drop in personal income primarily
reflected a decrease in government social benefits, both in
unemployment benefits and "other" benefits.
Meanwhile, the report showed personal spending climbed by 0.6
percent in September after jumping by an upwardly revised 1.0
percent in August.
Economists had expected personal spending to rise by 0.5 percent
compared to the 0.8 percent increase originally reported for the
previous month.
Excluding price changes, personal spending rose by 0.3 percent
in September after climbing by 0.6 percent in August.
With income slumping and sales rising, personal saving as a
percentage of disposable income dropped to 7.5 percent in September
from 9.2 percent in August.
A reading on inflation said to be preferred by the Federal
Reserve showed the annual rate of core consumer price growth in
September remained at 3.6 percent for the fourth straight
month.
"We expect core PCE inflation will peak above 4% in November and
only fall below 3.5% by April 2022, thereby testing the Fed's
patience," said Lydia Boussour, Lead US Economist at Oxford
Economics.
"We continue to believe the Fed will avoid the policy error of
tightening policy too early in the face of supply-driven inflation,
but its outcome-based FAIT framework will come under increasing
stress in Q1 2022," she added. "As such, the Fed could be pressured
by markets to raise rates earlier than our current forecast of
December 2022."
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