Stocks continue to rally while bonds hold steady.
Personal Income for September rose +.2%, missing expectations of +.4%. Personal Disposable Income, the income that is available for spending or saving after taxes, rose +.2% after a jump in August of +.4%. Personal Consumption Expenditures (PCE) increased +.4%. This measure accounts for over two thirds of U.S. Economic activity. The rise in personal income came from a 24 billion dollar rise in wages and salaries coupled with a 16 billion dollar increase in government social benefits. While we believe the U.S. economy remains on a decent growth track, the pullback is something worth watching in the future.
S&P Case-Shiller Home Price Index
The S&P Case-Shiller Home Price Index rose by a modest +.1% in August, as expected. This print now takes the annual growth rates down to +5.5% from a previous +5.9%. Within the 20 cities that are surveyed, 17 of them still saw an increase month-over-month. Some of the leading cities were Las Vegas (+1.1%), San Francisco (+.6%), and Tampa (+.6%). Cities seeing a decline included Seattle (-1%), New York (-.4%) and San Diego (-.3%). Overall, expectations are that the rise in home prices will continue to moderate now with the possibility that we might start to see month-over-month declines.
The October Consumer Confidence Index rose to 137.9, up from a downwardly revised 135.3 in September (originally 138.4). This is now the highest print since back in September 2000. The present situation index rose 3.4 points, while the expectations index increased by 2.1 points. As we’ve continued to see more strength in both labor markets and financial markets, the data this month is consistent and still proves that the consumer remains optimistic.
October Jobs Report
Payrolls came in well above market expectations for October, up 250k vs. a 200k consensus. The unemployment rate held steady at 3.7%, while average hourly earnings rose by +.2% and are now up above 3% year-over-year for the first time since 2009. Overall, the details within the report were very strong and will keep the Fed on pace for a December rate hike.