This morning, both personal income and personal spending were reported up just +0.2% in October, matching expectations and pointing to a gradual moderation in spending for many tapped-out consumers.

At the same time, the Fed’s preferred inflation series indicated prices continue to decelerate. The monthly PCE deflator was unchanged in October, which dragged the year-over-year headline pace down from +3.4% to +3.0%. The PCE core deflator retreated from +3.7% to +3.5% on an annual basis, and more importantly has increased at just a +2.5% pace over the past six months. Although still above the Fed’s +2.0% annual goal, the trend is clearly downward.

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