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Economy in Brief

U.S. Personal Income rose As Expected
by Tom Moeller December 22, 2005

Personal income rose an expected 0.3% last month following an upwardly revised 0.5% increase in October.

Growth in wage & salary income eased to 0.2% (4.2% y/y) from the unrevised 0.6% pop in October as factory sector wages fell 0.1% (+3.3% y/y). Service sector wages rose 0.2% (4.2% y/y) following 0.5% increases in October and September while government wages increased 0.2% (3.3% y/y).

Disposable personal income rose 0.3% (4.3% y/y) following an upwardly revised 0.4% October gain. Adjusted for the 0.4% decline in prices, take home pay jumped 0.7% (1.5% y/y).

The PCE chain price index dropped 0.4% as gasoline prices fell. Less food & energy, prices rose the same 0.1% as in October. Durables prices fell 0.2% (-0.9% y/y) as new auto prices were flat. Appliance prices fell 0.7% (+3.7% y/y) and audio, video & computer prices dropped 1.2% (-9.9% y/y). Clothing & shoes prices rose 0.2% (-1.5% y/y) while services price rose 0.3% (3.2% y/y) following two months of 0.4% increase.

The 0.3% rise in personal consumption expenditures was a bit light of expectations. Nondurables outlays fell 1.0% (8.0% y/y) though less gasoline & oil, spending on nondurables jumped 1.1% (6.9% y/y) led by a 1.5% (5.8% y/y) jump in spending on clothing & shoes. Spending on motor vehicles & parts rose 5.4% m/m and that helped lift durables spending overall 2.7% (-0.8% y/y), helped by a 1.3% (5.9% y/y) increase in spending on furniture. Services spending increased 0.5% (6.0% y/y) for the second month and the gain was led by a 0.6% (17.5% y/y) rise in spending on electricity & gas services.

Great Expectations and the End of the Depression from the Federal Reserve Bank of New York is available here.

Disposition of Personal Income Nov Oct Y/Y 2004 2003 2002
Personal Income 0.3% 0.5% 5.3% 5.9% 3.2% 1.8%
Personal Consumption 0.3% 0.2% 5.8% 6.5% 4.9% 4.2%
Savings Rate -0.2% -0.3% 1.3% (Nov '04) 1.7% 2.1% 2.4%
PCE Chain Price Index -0.4% 0.1% 2.7% 2.6% 1.9% 1.4%
  Less food & energy 0.1% 0.1% 1.8% 2.0% 1.3% 1.8%
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