In the wake of the hurricanes, consumers tapped savings to spend at the fastest paces since August 2009. Core PCE inflation (not counting food and energy) was 0.1% but overall PCE inflation was 0.4%. The savings rate is the lowest since 2008.
The BEA’s Personal Income and Outlays report for September shows:
The above data was reflected in the GDP report on Friday.
Savings Rate Declines
Households dipped into their savings to fund purchases last month, pushing savings to their lowest level since 2008.
“Relying on consumer savings to move the economy forward is not going to last for long,” said Chris Rupkey, chief economist at MUFG in New York.
Core PCE, the Fed’s prefered measure of inflation, rose a mere 0.1% for the fifth consecutive month. Core PCE has underperformed the Fed’s target for over five years.