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First Cut: October personal income down on interest and dividends, but wages and salaries improve

The data on personal income for October were flat from the prior month. A closer look puts the restrain in interest income (-1.0%) and dividends (-1.7%). Wages and salaries were up 0.4% compared to September, a fifth straight month of increases for this income.

Personal consumption expenditures were up 0.3% due to spending on nondurable goods (up 0.6%) that saw higher gasoline prices and services (up 0.3%). Durables spending was off (down 0.7%) after a burst of spending in September (up 1.2%).


The PCE deflator — the Fed’s preferred measure of inflation — was essentially on track with recent months at up 1.3% year-over-year from October 2018. The deflator excluding food and energy was up 1.6%, ticking lower for a second month in a row but also not much changed in recent months. When the FOMC next meets on December 10-11 it will still be waiting to see if the past three rate cuts in July, September, and October are going to support inflation returning to the Fed’s 2% objective.

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