Real Personal Consumption Expenditures (PCE) rose 0.6% in September 2017 above August. That was the largest monthly increase (SAAR) in almost three years. Given that Real PCE declined month-over-month in August, it is reasonable to assume hurricane effects for both. Across the two months, Real PCE rose by a far more modest 0.5% total, or an annual rate of just 3.4%, only slightly greater the prevailing average.

It is also quite reasonable to assume that spending even a little above what is really a poor average growth rate will not last long. As always, the issue is income, or what little national income growth there has been. That is really two parts combined for late 2017, meaning the longer-term problem of those “missing” 15.3 million Americans now joined with slowing labor utilization after the “rising dollar.”

The result is income growth that is beyond anemic. Real Disposable Personal Income per Capita has declined (seasonally adjusted M/M) for four straight months going back to May, therefore unrelated to tropical storm impacts. Year-over-year, per capita income growth is stuck at basically zero, just 0.53% as a 6-month average.

Without income growth there can be no acceleration in consumer spending. Real PCE over the intermediate term remains unmoved in either direction. Already at a soft pace, consistently weak consumer spending despite decelerating income growth can only lead to one thing:

The large monthly increase in spending in September had the effect of reducing the Personal Savings Rate to just 3.1%. That’s lower than in December 2016, and the lowest savings rate in just about ten years.

Normally, at least in the past few decades, a drop in the savings rate of this magnitude has meant consumers embracing recovery and the growth part of the business cycle. Though in the mainstream it is characterized that way today, the income data in all the various forms is uniformly suggesting something very different. US consumers can’t keep up spending even at an anemic pace, which is why according to several other economic accounts they haven’t been.