Home|Who We Are|Our Services|Resources|News Center|Contact Us|Client Access
More Articles  Printer Friendly Version


October Inflation Rate Slows, Spending And Income Cool, Making Further Rate Hikes Unlikely

5200 2

Inflation continued to fall in October and the economy showed signs of cooling down this past week.

The inflation index the Federal Reserve references in its policy statements dropped from 3.4% in the 12 months through September to 3% in the 12 months through October.

Meanwhile, consumer spending rose 0.2% in October, much lower than the 0.7% rise in September, the Commerce Department said Thursday.

In addition, economic activity in the manufacturing sector contracted in November for the 13th consecutive month, according to the Institute of Supply Management. The Manufacturing Purchasing Managers Index registered 46.7% in October, which is 2.3 percentage points lower than the 49 percent recorded in September and indicates a recession is under way in the manufacturing sector accounting for about 10% of U.S. economic growth.

5200 3

In addition, disposable personal income (DPI), a measure of income after current taxes, increased in October by $63.4 billion, or 0.3%, and personal consumption expenditures increased by $41.2 billion, or 0.2%.

In the 12 months through October DPI rose by 7.8%, while personal outlays rose by 7%. Those are strong income and spending figures, but the rate of increase has slowed.

The savings rate, at 3.8%, is below pre-Covid levels, as it has been since the government stimulus in 2020 and 2021.

5200 4

The slope of the 12 month PCE deflator index is reapproaching the 2% trajectory targeted by the Federal Reserve. Inflation is bending back to 2%, following the sharp acceleration experienced after the pandemic.

This shows the Fed’s monetary policy — hiking rates 11 times in the 19 months after March 2022 — has been effective and inflation has come under control. It also indicates no additional rate increases are likely. The next Federal Reserve change to lending rates may not come until the middle of 2024 or later, and it may be a rate decrease.

5200 5

The slowing economy and declining inflation rate buoyed stocks, sending prices higher for the fifth week in a row. The Standard & Poor’s 500 stock index closed Friday at 4594.63, up +0.59% from Thursday, and up + 0.97% from a week ago. The index is up +105.36% from the March 23, 2020 bear market low and is only -4.21% from its January 3, 2022, all-time high.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. ​​​​​​​​

Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances.
The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

Email this article to a friend

Stocks Closed At A Record High
Federal Reserve Projects Strong Growth
The Best People Were Wrong 
This Week’s Investment News In Six Charts
U.S. Investor Picture Of The Week
The Conference Board Backs Off Its Recession Forecast
Softening Economic Data, Inflation Fears Dampen Stock Rally
S&P 500 Closes Above 5000 For The First Time Ever
Why America Is The World’s Economic Leader
Investment News For The Week Ended Friday, January 26
Why Stocks Broke The All-Time Record High
A Strategic Update, With Stocks Near All-Time High And Crises Unfolding
2024 Begins With Positive Economic News
How 2023 Will Be Remembered In Financial History
A Good Week For The Economy And Investors 
Earnings Estimates Imply A Bullish Path For Stocks

This article was written by a professional financial journalist for Responsive Financial Group, Inc and is not intended as legal or investment advice.

©2024 Advisor Products Inc. All Rights Reserved.
© 2024 Responsive Financial Group, Inc | 204 W Wing St, Arlington Heights, IL 60005 | All rights reserved
P: 847-670-8000 | F: 847-590-9806 ben@rfgweb.com |
Disclosure | Contact Us
Responsive Financial Group, Inc. is a fee-only registered investment advisory firm in the State of Illinois. Information on this site is compiled from multiple locations and is believed to be accurate. Incorrect information may come from these outside sources. Should you notice anything please notify us immediately. Thank you!