Decent spending and income growth, stock market jumps, inflation under control. What's not to like?

Thursday had the release of the biggest monthly economic report next to next week's jobs report (and perhaps it's even more important than that). And it was...decent?

Despite softening in October, consumer spending has provided continued resilience to the U.S. economy despite lingering uncertainties in the economic outlook, with personal spending rising 5.3% year-over-year. Over the past 12 months, durable and nondurable goods spending… pic.twitter.com/vpcicIO7fu

— Chad Moutray (@chadmoutray) November 30, 2023

Real personal disposable income rose 0.3% in October after being flat in both August and September, with 3.9% growth over the past 12 months, when adjusted for chained 2017 dollars. At the same time, real personal spending rose 0.2% in October, with 2.2% growth year-over-year. pic.twitter.com/MoXsSejGG3

— Chad Moutray (@chadmoutray) November 30, 2023

If you exclude housing or treat it differently the story is a bit better.

3-month annualized inflation:

Core w/ new rent: 1.5%
Core ex housing: 1.7%
Core ex housing & used cars: 2.1%
Core services ex housing: 2.7%

(Note the last always runs high, is equivalent to 2% PCE.) pic.twitter.com/RbKHnciyIN

— Jason Furman (@jasonfurman) November 30, 2023

So OK growth, and no inflation? Seems like a win-win to me. 5 previous months were also revised in this report, and it included upward revisions for both income and disposable income during the Summer. Which means that instead of several recent months of disposable income that didn't keep up with inflation, we have seen inflation-adjusted disposable income rise in 9 of the 10 months measured in 2023. And we are now finally back to where we were in mid-2021.

With gas prices declining further in November, it looks like inflation will take another tick down in the reports that come out over the next few months, and Wall Streeters have decided that things are going to loosen up soon. And they have jumped back in on the market to get a jump start on it.

The S&P 500 set a high for the year on Friday, a day after clocking its best month of 2023, in a rally that quickly erased the benchmark index’s steep drop over the summer.https://t.co/DZMwhBoahu

— NYT Business (@nytimesbusiness) December 1, 2023

For several months, I've been saying that inflation is a ghost the Fed shouldn't be chasing, and the second half of 2023 has borne this out. The economy keeps moving ahead, and central bankers should realize that keeping the economy going forward should be their top priority for 2024. As part of that, they should turn rates back toward sensibility (like 3%-4% instead of 5.5%), to give some relief to leveraged consumers and prospective home-buyers who are paying more than they should.

We'll find out soon how the 2 weeks of Black Friday sales look, and see if the good consumer spending numbers continue for the rest of 2023. But October's figures seem good enough for me, and despite some friction, we seem to be doing just fine right now.