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Bloomberg
Numbers: Americans bought more new cars and leisure items in September, a consumption expense comparable to that of a strong economy.
Consumer spending climbed 0.4%, the government said on Monday, which is in line with MarketWatch forecasts. This was the seventh consecutive month in which expenses increased by at least that amount.
Lily: GDP growth of 3.5% marks the best two-quarter increase in four years
Revenues increased 0.2%, however. This was the smallest increase in 13 months.
Inflationary pressures, on the other hand, seemed to be slightly relaxed.
While the ECP inflation index rose 0.1% in September, the 12-month rate went from 2.2% to 2%.
The core inflation rate rose 0.2% in September, but the annual rate remained unchanged at 2% for the fifth consecutive month.
What happened: Americans spent more for the purchase of new cars and trucks as well as leisure items in September. They also spent more on health care.
The increase in spending exceeded revenue gains, likely due to turmoil caused by Hurricane Florence. The largest decline in income occurred among privately owned businesses.
In any case, this disparity led to a further decline in the US savings rate from 6.4% to 6.2%. The savings rate fell 7.4% in February from its highest level in two years, but remains relatively healthy.
Big picture: Consumers are spending at a rate sufficient to maintain the strength of the economy and inflation seems under control at the moment. The 2% inflation rate is exactly what the Federal Reserve wants.
What worries investors and economists is the possibility that inflation will rise further in the coming months and prompt the Fed to continue raising interest rates.
The lowest unemployment rate since the late 1960s leads to higher wages and firms face higher prices for some supplies, and even severe shortages of key positions such as truck drivers.
These concerns have contributed to the recent slide in stock prices.
Market reaction: The Dow Jones Industrial Average
DJIA, -1.19%
and the S & P 500
SPX, -1.73%
The two were going to open higher on Monday, but the month was bad for stocks. The Dow, for example, has dropped 8% since an all-time high in early October.
The 10-year Treasury yield
TMUBMUSD10Y, + 0.58%
was little changed at 3.10%. Yield has declined in recent weeks after peaking seven years earlier in the month, reflecting in turn renewed concern about the future of the economy.
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