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(M2) Correction Extends


Late Session Rebound


(M2) Corrective Cycle Remains In Play

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--Core PCE Prices Flat M/M; Overall Prices +0.1% M/M, +2.2% Y/Y
--Nominal PCE Up 0.3%, Real PCE Up 0.2%; Personal Income +0.3% 
By Kevin Kastner, Harrison Clarke, and Shikha Dave
     WASHINGTON (MNI) - Nominal PCE rose 0.3% in August, below the 0.4% 
increase expected, while core PCE prices were flat on the month, keeping 
the year/year rate at 2.0% after rounding, according to data released by 
the Bureau of Economic Analysis Friday morning. 
     The 2.0% year/year rate for core PCE prices remains at the Fed's 
inflation target for the fourth month in a row after June's gain was 
revised upward to 2.0%. 
     The 0.3% gain in current dollar PCE, below expectations, followed 
no revision to the July number at 0.4%, though it was close to being 
rounded up to 0.5%. Spending on durable goods was down 0.1% in the 
month, while nondurable goods spending rose 0.5% because of a 1.9% 
increase in energy prices. Services spending was up 0.4%.   
     Real PCE was up 0.2% in August, as the overall PCE price index was 
up only 0.1% despite the increase in energy prices. The overall PCE 
price index was up 2.2% year/year, down from 2.3% in July. 
     After inflation adjustment, durable goods PCE rose 0.2%, while 
real nondurable goods PCE was up 0.4% and real services PCE was up 0.2%. 
     An MNI calculation shows that real PCE in August was up 3.1% at an 
annual rate from the second quarter average, and was up 3.7% after an 
adjustment for only having two months of data. This was below the 3.8% 
PCE pace in the second quarter reported on Thursday.      
     Personal income growth was boosted by a 0.5% increase in wages and 
salaries, as well as gains in most other income categories. 
     The saving rate was unchanged in August at 6.6%, the same as in 
July after revisions. The July and August saving rates were below the 
6.8% rate reported for the second quarter. 
     Personal taxes rose by 0.4% in the month after a 0.3% increase in 
July. Disposable personal income rose by 0.3% after a 0.3% in July. Real 
disposable income was up 0.2%, the same pace as in July.   
     ** MNI Washington Bureau: 202-371-2121 ** 
[TOPICS: MAUDS$,MT$$$$,M$U$$$]

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