U.S. ECONOMICS: RBC On Personal Spending and Income

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Royal Bank of Canada (RY.TO, RY) notes the latest personal spending and income report provided the monthly detail of the 1.5% annualized gain in consumer spending in the third quarter as reported in national accounts yesterday. It says the moderation in real personal consumption growth in September is slightly disappointing as it leaves spending on a slowing trajectory heading into the fourth quarter. While some weakness in consumer spending in October might have been expected given the hit to confidence from the 16-day government shutdown at the beginning of the month, the encouraging payroll employment report points to a fairly muted impact, it says. Solid employment gains and faster growth in personal income, along with wealth effects related to an improving housing market, should support strong consumer spending going forward, it adds. Thus, it is still assuming some modest strengthening in fourth quarter consumer spending relative to the third quarter.




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