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Economy in Brief

U.S. Personal Income Down
by Tom Moeller February 28, 2005

Personal income dropped last month 2.3% following the 3.7% jump in December which was driven by Microsoft's dividend payment. Consensus expectations had been for a 2.6% decline. Excluding the dividend effect personal income increased 0.5% last month after a 0.6% rise in December. Figures from July through December were revised

Wage & salary income rose 0.6% (5.8% y/y) in January after an upwardly revised 0.5% December gain. Factory sector wages inched 0.1% higher but rose 4.8% y/y. Earlier figures were revised up sharply

Personal disposable income fell 2.6% (5.8% y/y) after the 4.1% surge in December. Adjusted for price inflation disposable income fell 2.8% m/m but rose 3.5% y/y.

Personal consumption fell slightly after the 0.8% surge in December and spending was lightly short of Consensus expectations for a 0.1% rise. Durable goods spending fell 4.3% and reversed a like gain in December due to lower motor vehicle sales. Spending on nondurables rose 0.8% despite the decline in gasoline prices last month and services spending rose 0.4% (5.3% y/y).

The PCE chain price index rose 0.2% in January. The 0.3% rise in the price index less food & energy was the steepest since December 2002.

Disposition of Personal Income Jan Dec Y/Y 2004 2003 2002
Personal Income -2.3% 3.7% 6.0% 5.6% 3.2% 1.8%
Personal Consumption -0.0% 0.8% 5.7% 6.0% 5.2% 4.6%
Savings Rate 1.0% 3.6% 1.1% 1.2% 1.4% 2.0%
PCE Chain Price Index 0.2% -0.0% 2.2% 2.2% 1.9% 1.4%
  Less food & energy 0.3% 0.0% 1.6% 1.5% 1.3% 1.8%
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