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The PCE price index rose 0.5% in September and 3.6% from a year earlier, the BEA reported on October 29. Excluding food and energy, prices rose 0.3% on the month and 3.1% over the year. This is the measure the Fed targets. Chair Warsh restated that target the day before. “There’s a target of price stability and it’s 2 percent as measured by PCE.”
Households kept spending faster than they earned. Personal income rose 0.2% in September, or $54.5 billion. Disposable income also rose 0.2%. Consumer spending rose 0.5%, or $113.1 billion. The personal saving rate was 3.8%.
| Measure | Month | Year |
|---|---|---|
| PCE prices | +0.5% | +3.6% |
| Core PCE prices | +0.3% | +3.1% |
| Personal income | +0.2% | n/a |
| Disposable income | +0.2% | n/a |
| Consumer spending | +0.5% | n/a |
| Saving rate | 3.8% | n/a |
Why it matters for deposits
Spending that outruns income comes out of savings. A 3.8% saving rate leaves little cushion for households facing high fuel prices. The EIA put regular gasoline at $4.269 a gallon in the week of October 26, up $1.23 from a year earlier. Diesel was $6.352.
Core inflation at 3.1% is more than a point above the target the Chair restated the day before. The pressure on rates is not going away.
- Track balances in your retail checking and savings accounts against the saving rate. Low savings and high prices usually show up first as smaller balances and more overdrafts.
- Stress small-business borrowers in trucking, farming and delivery for diesel above $6 a gallon.
Zovos keeps key risk indicators for deposits and overdrafts beside the macro series that drive them. A weak saving rate then shows up next to your own trend.
This is for information only and is not legal or investment advice. Verify all figures against the linked primary sources before acting.