Real personal consumption expenditure accelerated 0.38% m/m in September. At the same time, real disposable personal income decelerated -0.08% m/m, its fourth month in a row registering a decline, and the personal saving rate fell 60 basis points to 3.40%. Looking back on the third quarter, the spending, income, and saving data would suggest consumers likely drew down savings to continue spending. Aside from reducing savings, it will be important to monitor consumer credit card use, which has been growing north of 10% y/y since February 2022 and came in at 1.2% m/m in August (not yet released for September). Importantly, the average interest rate paid on that debt reached another all-time high of 21.2%. In addition to an accumulation of costly debt, September was the last month of spending data before the student loan payment pause officially ended. In terms of the path of spending growth from here, the setup is most likely tougher moving into 4Q23, unless income growth accelerates.
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Senior Economic Analyst
Boyd Watterson Asset Management, LLC