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Economy in Brief

U.S. Personal Income Lifted By Strong Wage Gain
by Tom Moeller December 1, 2005

A strong 0.6% gain in wage & salary disbursements raised U.S. personal income by 0.4% in October. The increase in wages offset declines in proprietors' and rental income while the latest rise in total income followed an unrevised 1.7% surge in September, though income in August was revised down slightly. Consensus expectations had been for 0.5% income growth in October.

The effects of Hurricanes Katrina, Rita & Wilma are reflected in the last three months' income figures. A description of these effects can be found here.

Wages & salary income doubled the previous months' rise and increased 0.6% (5.0% y/y) on the strength of a 1.4% (3.2% y/y) surge in factory sector wages. Service sector wages rose 0.6% (5.5% y/y) after an upwardly revised 0.5% September increase and government wages rose 0.2% (3.4% y/y).

Disposable personal income rose 0.3% (4.2% y/y) following the unrevised 1.9% jump in September. Adjusted for the 0.1% rise in prices, take home pay rose 0.2% (0.9% y/y).

The PCE chain price index rose a modest 0.1% in October, held back by lower gasoline prices which caused nondurable prices to fall 0.4% (+5.1% y/y). Less food & energy the modest 0.1% increase additionally reflected lower light vehicle prices. Services price rose 0.4% (3.2% y/y) for the second month.

Personal consumption expenditures rose an expected, modest 0.2%. Light vehicle sales fell for the third consecutive month and lowered spending on durables by 2.5% (-2.0% y/y). Nondurables outlays rose 0.6% (9.1% y/y) but adjusted for the y/y gain in prices spending on nondurables rose a lesser 3.8% y/y. Services spending rose 0.5% (6.2% y/y).

Disposition of Personal Income Oct Sept Y/Y 2004 2003 2002
Personal Income 0.4% 1.7% 5.3% 5.9% 3.2% 1.8%
Personal Consumption 0.2% 0.5% 6.1% 6.5% 4.9% 4.2%
Savings Rate -0.7% -0.8% 1.1% (Oct '04) 1.7% 2.1% 2.4%
PCE Chain Price Index 0.1% 0.9% 3.3% 2.6% 1.9% 1.4%
  Less food & energy 0.1% 0.2% 1.8% 2.0% 1.3% 1.8%
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