Wells Fargo, explained that after a relatively strong start to the third quarter, personal income and spending weakened in August and they see that GDP growth will probably downshift in Q3. “Personal income increased only 0.2 percent in nominal terms while disposable personal income increased 0.1 percent in August. However, real disposable personal income declined 0.1 percent due to higher inflation during the month.” “August personal consumption expenditures increased only 0.1 percent in nominal terms after increasing 0.3 percent in July while real personal consumption expenditures also declined 0.1 percent after inching higher, by 0.2 percent, in July. The biggest difference compared to July was a $16.3 billion decline in durable goods consumption, which almost erased the $16.5 billion increase in durable goods consumption in July. On the other hand, services consumption was robust in August, increasing $26.7 billion in August after a $20.7 billion increase the previous month.” “With the release of personal income and spending for August it is clear that both of these numbers will not contribute to a repeat of the strong performance we saw in GDP during the second quarter of the year. Although we may see a rebound in September, it is probably not going to be enough to override the weakness we saw in August.” “Furthermore, although price pressures remained contained during the month, with the PCE price index increasing 0.2 percent in the month while the core PCE inched up only 0.1 percent, the weak performance of both nominal income and consumption growth numbers pushed the real numbers into negative territory, which will put downward pressure on real overall numbers for GDP in Q3.” “Thus, even with an expected rebound in the September real consumer spending numbers, we see downside risk to our call for real consumer spending in Q3.”