Spending Rises while Income Falls

Market Overview
Read time 1.1 minutes

Year To Date Performances:

1. Consumer spending is surging even as incomes take a hit. In a display of resilience, household spending shot up by 0.8% in July, marking the quickest rate since January. This spending spree is happening in the face of slowing wage growth and a dip in real disposable income for the first time in over a year. The likely culprit? Consumers seem to be tapping into their savings, with the personal savings rate taking its biggest plunge since early 2022, falling to 3.5% from 4.8% in July.

2. While the S&P 500 saw a 3% uptick in the last 2 weeks, investor reactions have been a mixed bag. According to AAII, individual investors are mostly unmoved, showing just a minor uptick in bullish sentiment in their recent survey. Contrast that with professional money managers, as reported by NAAIM, who dramatically increased their equity exposure from 34 to 61, wiping out the declines from the week before. Not to be outdone, State Street's Investor Confidence Index showcased the largest jump in confidence since December 2020, reaching its highest point since last September.

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4. Headlines

   1. Core CPE (the Federal Reserve’s preferred inflation metric) was up 4.2% year over year, showing that the Fed is getting closer to its 2% goal. It was at 4.7% in July.

   2. Russia and OPEC+ have agreed to lower crude oil exports to raise prices in the coming months. The new cuts will start in October.

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