U.S. personal income growth seems to have slowed in November

U.S. personal income growth is expected to have slowed in November after a strong 0.6 percent gain in October. According to a Societe Generale research report, personal income is expected to have decelerated to just a rise of 0.1 percent. Even if the rise in private payrolls in November was fairly good, average hourly earnings dropped 0.1 percent that possibly restricted the overall increase in private wages and salaries, the biggest component of personal income.

In the meantime, spending was weak in October and probably stayed the same again in November. It is expected to have increased by about 0.2 percent. The retail sales control group barely rose 0.1 percent in October, which possibly was a drag on the overall spending figure. In the meantime, electricity production fell by a huge 4.5 percent in November that implies another drag in the services component from consumption of electricity and gas.

“Given our forecast for a 0.1 percent rise in the headline PCE deflator, real spending may have inched up by 0.1 percent for a second straight month”, said Societe Generale.

In the meantime, the core PCE deflator might have remained flat in November. Even if the core inflation accelerated 0.15 percent, the producer price index and consumer price index components that feed into the core PCE implies softness in the core PCE deflator, stated Societe Generale.