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First Cut: Personal income and spending continue to rise modestly

The data for November on personal income and spending showed incomes continue to rise modestly (up 0.2%) and wages and salaries are in line with that (up 0.2%). Personal consumption expenditures rose more quickly (+0.4%), mainly due to another month of busy spending on durable goods (+0.9%) that in part reflect replacement of property destroyed in flooding and wildfires. Nondurables consumption was up only 0.2%, restrained by falling gasoline prices. Services were up a modest 0.4%.

The PCE deflator put total prices at up 1.8% compared to a year ago. The core PCE deflator was up a slightly faster 1.9%. In any case, both measures continue to hover near the Fed’s symmetric 2% objective. Chair Jerome Powell was asked about an inflation undershoot at his Wednesday, December 19 press briefing. He emphasized that the objective means for inflation to be near the target, not necessarily consistently on it and that present inflation is quite close to 2%.

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