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Personal income grew by $48.1 billion in September, 0.4%, its fastest pace since March. Despite the strong income growth consumption personal consumption growth outpaced income, leading the savings rate to fall to its lowest level in ten months.



Personal income growth accelerated in September, led by dividend, rental and proprietor income. Wage income improved in September, rising 0.3%, however remains modest consistent with the weak labor market.

Real spending accelerated to 0.4% in september, however nominal spending jumped 0.8% over the month, the fastest growth since February. Spending growth was led by goods, both durable and non-durable.

Nominal spending outpacing income led the savings rate to drop to 3.3%, its lowest level on ten months. The savings rate has now fallen 1% since June.

Read the BEA release.

Existing home sales accelerated 3.4% in April to an annual pace of 4.6 million units, up from the 4.5 million units reported in March. After falling in March, home sales are now back near the rapid pace set in January. January’s pace was the strongest since mid-2010. April’s pace is 10% faster than at this time last year.



April’s increase in sales was broad based, with all regions reporting improved sales. The gains ranged from 5.1% in the Northeast, to 1.0% in the Midwest.

The supply of existing homes on the market increased 9.5% to 6.6 months, its highest level since November. A surge in homes listed for sale drove the inventory up despite the faster pace. April’s growth in listings is the strongest one month gain since 2006, indicating that homeowners are beginning to gain confidence in the market.

House prices rose notably in April, with median home price rising 10.1% to $177,400. Home price appreciation is being driven by a declining share of distressed homes sold. According to the NAR, the share of distressed sales fell from 37% one year ago to 28% in April.

Read the report.

Erskine Bowles and Alan Simpson, former heads of the debt commission, announced a new deficit reduction plan Tuesday. The deal, which would cut the deficit by $2.4 trillion over the next 10-years, is an attempt to find a middle ground between Democrats and Republicans. House Republicans have set a $4 trillion target for deficit reduction, while the White House has set a more modest $1.5 trillion goal.



The new plan would build on recent measures to address the deficit, and cut an additional $2.4 trillion from deficits from 2014-2023. These savings would be achieved via $600 billion in cuts to Medicare and Medicaid, $600 billion in additional tax revenue following tax reform, and $1.2 trillion from cuts and caps to discretionary spending.

Read the proposal.