The Bureau of Economic Analysis reported that personal spending jumped 1.0 percent in September after edging up just 0.1 percent in August. It was the fastest monthly pace since August 2009, boosted by strong growth in durable and nondurable goods spending, up 3.2 percent and 1.5 percent in September, respectively. The durable goods figure was buoyed by a significant increase in motor vehicles and parts purchases, likely supported by hurricane-related replacements. In general, Americans have continued to spend at relatively healthy rates overall. Indeed, personal spending has increased 4.4 percent over the past 12 months, up from 4.0 percent year-over-year in the prior release.
The saving rate plummeted from 3.6 percent in August to 3.1 percent in September, its lowest level since December 2007, or since the start of the Great Recession. To put that figure in perspective, the saving rate was 4.5 percent one year ago.
Meanwhile, personal incomes rose 0.4 percent in September, up from a gain of 0.2 percent in August and its best monthly expansion since February. Over the past 12 months, personal incomes have risen 3.0 percent, up from 2.75 percent year-over-year in August. In addition, manufacturing wages and salaries edged higher for the month, up from $833.2 billion in August to $834.7 billion in September. That translated into a 1.7 percent increase in manufacturing wages and salaries over the past 12 months, up from $820.4 billion in September 2016.
In other news, the personal consumption expenditure (PCE) deflator also increased 0.4 percent in September, an eight-month high. With that said, pricing pressures remain very modest overall. After seeing pricing pressures accelerate strongly earlier this year—with the PCE deflator peaking at 2.2 percent year-over-year in February—inflation has pulled back since then. Since September 2016, the PCE deflator has increased 1.6 percent, up from 1.4 percent in August. Similarly, excluding food and energy, core inflation grew 0.1 percent in September, or 1.3 percent year-over-year, matching the rate in August, which was the lowest since November 2015.