Giving Thanks for Income Improvement
Real disposable income jumped up--just in time for the holidays.
Falling manufacturing indexes in China and Europe and poor bond auctions for government debt in Europe set us up for a bad conclusion to the pre-holiday period for financial markets.
U.S economic data were generally as expected and pretty good, but still not as impressive as data in the past several weeks. As I discussed last week, the GDP growth report for the third quarter dropped to 2.0% from 2.5% on a huge revision in the inventory data that was only partially offset by more-favorable import data. Existing home sales continued a string of better, but certainly not ebullient, news from the housing market. The personal income and expenditure report managed to finally show a month of strong income growth. However, the good news there was offset by what the market thought was lethargic consumption growth. On a year-over-year basis, however, consumption remained locked in the exceptionally narrow 2% range. Initial unemployment claims, on a four-week moving average basis, declined for another week, which should bode well for next week's employment report.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.