US household income growth looked pretty solid with a 0.6% m/m gain during January, which tends seasonally, to be a weaker month. That lifts the y/y rate back to a shade under 4.0%, although the near-term trend remains one of moderation. On the spending side the increase surprised on the downside at +0.2% m/m and that pulled y/y growth back to 4.5%
While the headline numbers looked ok versus consensus, they reinforced some of the trends we’ve seen over the last few months. On the inflation side while there doesn’t seem much to worry about looking at the headline, there has been a build in core prices. Core PCE picked up to just under 1.8% y/y, which fits with the (stronger) increase we’ve seen in core CPI.