FXStreet (Córdoba) – According to Jay H. Bryson, Global Economist at Wells Fargo, solid gains in employment and hours worked are creating strong growth in income while robust income growth and low inflation are supporting solid growth in real consumer spending.
Key Quotes:
“Driven by a strong 0.5 percent increase in wages and salaries, personal income rose 0.3 percent in November, besting the 0.2 percent increase expected by the consensus forecast. The rise in total personal income in November would have been even stronger had interest income and income received from dividends not slipped 0.2 percent and 0.8 percent, respectively.”
“Strong growth in employment and the rise in hours worked have supported growth in private wages and salaries, which are up nearly 5 percent on a year-ago basis at present.”
“The year-over-year rise in the core PCE has remained unchanged at 1.3 percent thus far throughout 2015. There clearly is not much consumer price inflation in the economy at present, whether one looks at the overall PCE deflator or the core deflator.”
“The collapse in energy prices over the past year may be bad news for energy producers but it is a boon for consumers. The flat reading on the PCE deflator in November means that the 0.3 percent rise in nominal income translated into a solid 0.2 percent increase in real disposable income. (Tax payments by consumers rose 0.1 percent).”
“On a year-over-year basis, real disposable income (a.k.a., purchasing power) was up 3.7 percent in the September-November period. Strong growth in real income has helped to support solid growth in real PCE recently, a trend that we expect will remain largely intact in 2016.”
(Market News Provided by FXstreet)