Americans’ confidence in the overall economic picture appears to be unwavering, with consumer spending rising for the seventh straight month in September, despite a negligible increase in earnings.
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Consumer spending increased 0.4 percent in September, at an annual rate of 4.0 percent, the fastest in nearly four years. Personal income rose 0.2 percent in September, the smallest increase since June 2017.
Wage growth has been somewhat stagnant despite a robust jobs market, with the unemployment rate near a 49-year low of 3.7 percent.
There are a few ways to look at this – either consumers are extremely confident in the state of the global economy, such that they are shrugging off slow wage growth, or perhaps it could mean a slowdown in spending will follow.
While consumers are spending more, inflation has been somewhat tepid. The core Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, is sitting at around 2 percent, in line with the central bank’s target.