 Stocks ended the month of September and the third quarter on a high note, with all three indexes turning in gains despite comments from Fed Chair Jerome Powell that there might only be two more interest rate cuts this year. This is the third consecutive month the DOW has closed above 40,000. Consumer Spending Rises 0.2% Consumer spending rose 0.2% in August after rising 0.5% in July. Gains were slightly below expectations. Consumer spending was up 5.2% year over year. Core consumer spending was up 0.1% for the month and 2.9% year over year. A 0.4% increase in spending on services accounted for all of the gains. Spending on durable and non-durable goods fell. Annual revisions to national accounts data published in September showed stronger wages and salaries growth in the second quarter than had been previously estimated. The savings rate was also higher than previously reported. Higher incomes and savings bode well for consumer spending for the rest of the year. Personal income rose 0.2% in August after rising 0.3% in July and was up 5.6% year over year. Wages climbed 0.5% in August after rising 0.3% in July. Consumer Prices Rise 0.2% The Consumer Price Index (CPI) rose 0.2% in August after rising 0.2% in July and year-over-year inflation dropped to 2.5% after falling to 2.9% in July. Core prices rose 0.2% in August after rising 0.2% in July and year-over-year core inflation fell to 2.5%. It was the fifth consecutive monthly decline for core inflation and was primarily due to falling prices for energy and gasoline. It was the lowest reading for year-over-year inflation since 2021. The core CPI inflation rate peaked at a 40-year-high of 6.6% in September 2022. The personal consumption expenditures (PCE) price index rose 0.1% in August after an unrevised 0.2% gain in July and was up 2.2% year over year after being up 2.5% year over year in July. Excluding the volatile food and energy components, the PCE price index increased 0.1% after an unrevised 0.2% rise in July. In the 12 months to August, core inflation advanced 2.7% after climbing 2.6% in July. The US Fed tracks the PCE price measures for their 2% inflation target. Consumer Confidence Falls to 98.7 
Unemployment Falls to 4.1% 
Chicago PMI Rises to 46.6 The Chicago PMI inched up to 46.6 in September after rising to 46.1 in August, leaving the index still below the break-even point of 50. The Index has been below 50 for the past 23 months. Looking back to when the series began in 1967, the PMI has ranged from 20.7 in June 1980 to 81.0 in November 1973. Wholesale Prices Rise 0.2% The Producer Price Index (PPI) rose 0.2% in August after the 0.1% increase in July was revised to no change. The PPI was up just 1.7% year over year after being up a downwardly revised 2.1% in July. The slightly bigger than expected monthly increase largely reflected a rebound in prices for services, which rose by 0.4% in August after falling by 0.3% in July. The cost of goods was largely unchanged. Core producer prices, which exclude prices for food, energy and trade services, rose by 0.3% for the second straight month. PPI peaked at an 11.7% year-over-year increase in March 2022. Q3 GDP Unrevised at 3.0% Q2 GDP remained at 3.0% in the third and final reading from the Commerce Department after being revised up from 2.8% in the second reading. Consumer spending was revised to 2.8% from 2.9% in the second reading but was still up considerably from the 2.3% first reported. Business spending rose 3.1%, up from 2.7% first reported. Most other figures were little changed from the second reading. PCE remained at 2.5% with core PCE at 2.8%. PCE increased 2.6% during the second quarter, the slowest pace since the first quarter of 2021 and a big slowdown from the 3.4% pace in Q1. Core PCE inflation, which excludes food and energy prices, increased 2.9% during the second quarter, down from 3.7% in Q1. Fed Cuts Rates by Half a Point The Fed cut interest rate by half a percentage point in mid-September to a range of 4.75% to 5.00%, beginning a widely expected cycle of easing by demonstrating confidence that inflation is under control. The larger than expected cut also signals the Fed’s growing unease with the labor market as job growth slows. Policymakers see another 50 basis points of cuts in 2024, most likely in the form of a quarter-point cuts at the Fed meetings in November and December, a full percentage point in 2025 and a final half-point cut in 2026 to bring rates down into the 2.75% to 3.0% range. Falling interest rates quickly make business and consumer loans more affordable; mortgage rates have already dropped. Sky-high credit card interest rates usually take longer to come down. The Fed began raising rates in March 2022 to try and bring down inflation. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
|
|
