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U.S. Core Personal Consumption Rates Fall

Although a secondary metric, U.S. Core Personal Consumption (Jan.) has grabbed the attention of the financial media this morning. The figure lagged both expectations and the previous release, suggesting that consumers are tapering spending in anticipation of an economic slowdown. Today’s figures are eyebrow-raising as they come on the heels of Thursday’s dismal U.S. Q4 GDP report.

Core Personal Consumption Falls In January

While certainly not a blockbuster report, U.S. Core Personal Consumption for January underperformed. Here is a look at the data:

Event                                                                                     Actual     Projected    Previous

Core Personal Consumption Expenditures(MoM, Jan.)   0.1%            0.2%             0.2%

Core Personal Consumption Expenditures(YoY, Jan.)      1.8%            1.9%             2.0%

So, what is the big deal? On the surface, not much. These figures are down moderately on a monthly and yearly basis. However, they do suggest that the U.S. government shutdown from earlier this year had a measurable impact. This concept is spilling over into Q1 2019 GDP projections and may figure into the coming fall’s U.S. government budget negotiations. In short, many in the financial media are citing today’s consumption figures as further evidence that an economic downturn is on the way in the U.S.

U.S. Stocks Are Ignoring Core Personal Consumption

Of course, theory is one thing and reality is another. U.S. indices have opened higher, led by triple-digit gains in the DJIA. Thus far, the markets aren’t buying the narrative that a 2019 or 2020 recession is inevitable.

June E-mini DOW Futures (YM), Daily Chart
June E-mini DOW Futures (YM), Daily Chart

Overview: At press time (10:20 AM EST), the U.S. indices are on the bull and the June E-mini DOW is nearing 26000. It is a bit early to tell, but we may be looking at a strong close to the trading week for U.S. equities.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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