Roll Out The Barrel: Real Personal Spending Lowest Since September 2009 As Fed Rate Hike Probability Hits 82%

Today’s economic news feed should be of interest to the The Federal Reserve.

Core Personal Consumption Expenditures (sans food and energy) for January were +0.3% MoM and +1.7% YoY, below The Fed’s target inflation rate of +2.0%.

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Of particular note is Real Personal Spending for January 2017. It fell -0.3% from December and is the lowest since September 2009, just after the end of The Great Recession in June 2009.

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And Real Disposable Personal Income YoY has been dropping steadily since January 2015.

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Inflation under 2% and declining Real Disposable Income YoY. Not pretty.

So, of course, the market is betting on The Fed RAISING rates at the March 15 FOMC meeting. In fact, the current implied probability of a rate hike in the range of 0.75-1% is 82%.

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Yes, there is little doubt that the Fed Funds rate will be rising over time.

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I guess it is time to Roll Out The Barrel and play the Beer Barrel polka!

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