According to the Bureau of Economic Analysis in the US, the Personal Income and the Disposable Personal Income (DPI) increased in August, which is good news for the FED. Higher income rates typically contribute to higher spending rates in the economy, which in turn ensures price stability and boosts inflation towards FOMC’s target level.
“Personal income increased $73.5 billion (0.4 percent) in August according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $77.7 billion (0.5 percent) and personal consumption expenditures (PCE) increased $20.1 billion (0.1 percent). […] The $73.5 billion increase in personal income in August primarily reflected increases in wages and salaries, nonfarm proprietors’ income, and personal current transfer receipts that were partially offset by a decrease in personal interest income” [source]
Inflation in the US remains below the 2 per cent symmetric range that was set by the FOMC, and as a result of that, any boost in the consumer spending activity will be welcoming news. You can read more about the recent tumble in US inflation by 0.1 per cent here.
Image source: TradingEconomics.com
Meanwhile, the market did not react noticeably to the news regarding the heightened incomes, and Friday’s trading session remains calm. The S&P500 is consolidating in a range above the support level at 2958, which is also the 23.6 per cent Fibonacci retracement. The last three candles on the daily chart exhibit substantial lower-shadows, which indicates uncertainty in the market as the price tests the strength of the aforementioned support.
Image source: Trendsharks ©, created with TradingView.com
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