Deceleration weighed on personal income and spending growth for the US last month, according to this morning’s update from the Bureau of Economic Analysis. Consumer spending rose just 0.1% in September vs. the previous month—the smallest rise in eight months. Disposable personal income growth was weak too, rising only 0.1% in September—the weakest gain since April. Consider, too, that private-sector wage growth—the foundation for consumer spending and the US economy in general—just posted its first monthly decline in more than a year. Adding to the gloomy numbers is the sight of the year-over-year comparisons ticking lower as well.
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The recent turbulence in global markets is a signal that the potential for macro risk is on the rise. One way to quantify the threat for the US economy is by monitoring four financial stress indexes that are published by regional Fed banks. Although all of these benchmarks show that risk has increased lately, current levels remain well below their respective danger zones. That’s no guarantee of smooth sailing, but the fact that financial stress remains in the “normal” if slightly elevated range suggests that this variety of risk isn’t a major threat for the US economy at the moment. Trouble could arise for other reasons, of course, but the odds are low that a financial-related catalyst will create a problem for the US in the near term.
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● US Q3 GDP growth slows to 1.5% | Reuters
● US economy stronger than GDP suggests | The Economist
● US jobless claims but still close to 40-year low | MarketWatch
● Bloomberg US Consumer Comfort index falls to 5-week low | Bloomberg
● US Pending Home Sales Index falls for 2nd month in Sep | The Hill
● Eurozone economic sentiment improves in October | Reuters
● German retail spend flat in Sep but rise 3.4% YoY | Reuters
● Bank of Japan holds off on more monetary stimulus | Guardian