A variety of statistics, released Friday by both the U.S. government as well as private organisations, gave mixed signals about the U.S. economic direction. This added to Wall Street’s volatility.

Data show, on the one hand that household spending is declining which may have slowed down the economy’s recovery.

The personal consumption of goods and services rose more quickly than the income. Consumers either took out credit or used their savings to finance the additional spending. This is bad news for economic recovery.

Additionally, credit may become more costly once the Fed starts to taper and your savings run dry. These two developments could slow down recovery.

In August 2021 the US saw a decrease in personal income of 0.2% compared to July’s 1.1% increase. The market expected a 0.3% rise. Disposable income (DI) — income after taxes — increased at a meager 0.1%, while Real DI — DI adjusted for inflation — decreased by 0.3%.

In August, personal consumer spending rose at 0.8% per month. It’s a significant increase from July’s 0.1% decline and is ahead of the expected 0.6% market gain.

These gains could not be sustained due to the drop in real disposable income.

Two industry reports show data that shows the manufacturing sector continues to gain momentum. The September IHS Markit U.S. Manufacturing PMI report came at 60.7, up from a preliminary of 60.5 — a reading above 50 indicates that the manufacturing sector is expanding.

Also, the September Institute of Supply Management Index was 61.1 (September 2021), up for a second month straight and ahead of market predictions of 59.6.

Wall Street wasn’t sure what to make of these numbers. This is why volatility was seen in early morning trading, as traders and investors searched for clues about what the future held.

Early morning volatility was exacerbated by the tug-of-war between industries that benefit from the opening and those which benefit from closing the economy. This happened after Merck (MRK), announced it had applied for FDA emergency approval for its COVID-19 drug treatment.

Bottom line: Wall Street volatility will continue until there is better information about the economic direction, COVID-19 spread, and the state of fiscal and monetary policy.

Disclosure: Panos Mourdoukoutas was employed by Merck at the time of publication.

Disclaimer: Information in this article does not necessarily reflect those of TipRanks. TipRanks does not warrant the accuracy, reliability or completeness of this information. This article is not intended to be interpreted as an offer or recommendation for the purchase or sale of securities. The article does not provide legal, financial, investment, or professional advice. It also doesn’t take into consideration the individual needs or requirements. Neither is the information contained in it a complete or comprehensive statement about the subject or issues discussed. TipRanks, its affiliates, disclaim any liability or responsibility in relation to the article’s content. You are responsible for your actions based upon the articles. TipRanks’ or any affiliates does not endorse this article or make it a recommendation. Performance in the past is no guarantee of future performance, price or results.