It is no secret that the Federal Reserve wants to see inflation rise rather than fall. The recent rate hike was a signal that the markets and the economy are ready to begin a return to normalcy. Janet Yellen and her fellow Fed presidents have all indicated that they expect (or at least hope) inflation will return toward a 2.0% to 2.5% range.
Now we have a semi-inflationary reading on the economy via personal income and spending. November saw gains in both income and spending. Investors may have not had much reaction here since some of the personal consumption expenditures (PCE) data had been inadvertently released on Tuesday night.
Personal income rose by 0.3% in November, a tad higher than the 0.2% expected by Bloomberg. Personal income was left unchanged from the 0.4% reading in October.
Consumer spending, a key for retail and daily spending, also rose by 0.3% in November. Bloomberg was calling for the reading to be 0.3% as well. The reading from October was revised to 0.0% from a gain of 0.1%.
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Back to the inflation: The so-called PCE Price Index was just 0.0% on the headline for the monthly change. The Core PCE price index was up by only 0.1%, but that met expectations and was a tad higher than the 0.0% seen in October.
Inflation looks or sounds a tad better on the annualized basis. The PCE Price Index was up 0.4% from a year ago and the Core PCE Price Index was up 1.3% from a year ago.
Neither income nor spending should be major market movers. They were just too close to estimates. Still, neither report is very much support for continual or massive interest rate hikes ahead.
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