Income growth in August was only .1% m/o/m and July was revised to growth of just .1% from the initial figure of up .3%. Because the headline PCE inflation number was up .4% m/o/m, REAL income growth was down .3% and was up just .1% in July. The WSJ today quotes Bernanke that QE is a “main street policy.” That of course is where the debate begins and ends. On a y/o/y basis it looks better though as income growth is up 3.5% and the PCE is up by 1.5%. Spending rose .5% after being up .4% in July. After the inflation adjustment, spending was up just .1% in Aug but higher by .4% in July. The Savings Rate fell to 3.7% from 4.1%, a 4 month low as of course ideally, stronger income growth would be a better fuel for spending.
