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Economy in Brief

U.S. Personal Income and Spending Growth Remain Moderate
by Tom Moeller  November 26, 2014

Overall personal income increased 0.2% during October (4.1% y/y) after an unrevised 0.2% September rise. The increase disappointed expectations for a 0.4% improvement in the Action Economics Forecast Survey. Wages & salaries earnings improved 0.3% (4.4% y/y) while proprietors income jumped 0.5% (3.3% y/y). Rental income gained 0.4% (7.1% y/y) but personal transfer receipts slipped 0.1% (5.5% y/y), held back by a 0.4% decline (+14.1% y/y) in Medicare income. Earnings from dividends jumped 0.6% (5.1% y/y) but interest income fell 0.2% (+0.1% y/y), down for the fourth straight month. Disposable income increased 0.2% (3.9% y/y) and in real terms it ticked 0.1% higher (2.5% y/y).

Personal consumption expenditures increased 0.2% (3.6% y/y) following no change in September, revised from down 0.2%. A 0.3% increase had been expected. Motor vehicle purchases fell 1.7% (+7.0% y/y) following a 4.5% decline while spending on furnishings & durable household equipment improved 0.4% (2.6% y/y) after a 0.3% gain. Apparel purchases jumped 0.8% (2.0% y/y) after a 0.4% shortfall and spending on gasoline fell 2.0% (-4.7% y/y) with lower prices. Services spending added 0.3% (3.8% y/y) for a second month, driven by a 0.9% rise (6.9% y/y) in restaurants and accommodations. In constant dollars, overall spending increased 0.2% (2.2% y/y).

The equal gains in income and spending left the personal saving rate stable at 5.0%, though September's rate was revised down from 5.6%. Personal savings fell 0.4% (+10.5% y/y) following a 1.3% rise.

The chain price index nudged 0.1% higher last month (1.4% y/y), repeating a 0.1% uptick. Energy prices fell 2.0% (-1.9% y/y) while food prices were roughly unchanged (2.5% y/y). Durable goods prices also were roughly unchanged (-2.2% y/y) while nondurables prices fell 0.4% (+0.8% y/y). Gasoline prices declined 3.0% (-4.8% y/y). Services prices gained 0.2% (2.3% y/y). The price index excluding food & energy improved 0.2% (1.6% y/y) following three straight 0.1% upticks.

The personal income & consumption figures are available in Haver's USECON and USNA databases. The consensus expectation figure is in the AS1REPNA database.

Personal Income & Outlays (%) Oct Sep Aug Y/Y 2013 2012 2011
Personal Income 0.2 0.2 0.4 4.1 2.2 5.2 6.2
  Wages & Salaries 0.3 0.2 0.5 4.4 2.8 4.5 4.0
Disposable Personal Income 0.2 0.1 0.3 3.9 1.0 4.9 5.0
Personal Consumption Expenditures 0.2 0.0 0.5 3.6 3.6 3.7 4.8
Personal Saving Rate 5.0 5.0 4.9 4.7
(Oct. '13)
4.9 7.2 6.0
PCE Chain Price Index 0.1 0.1 -0.0 1.4 1.2 1.8 2.5
  Less Food & Energy 0.2 0.1 0.1 1.6 1.3 1.8 1.5
Real Disposable Income 0.1 0.1 0.3 2.5 -0.2 3.0 2.5
Real Personal Consumption Expenditures 0.2 -0.0 0.6 2.2 2.4 1.8 2.3
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