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Economy in Brief

U.S. Personal Income Again Light, Core Prices Ease
by Tom Moeller December 22, 2006

November personal income again rose a bit less than expectations with a 0.3% increase after a downwardly revised 0.3% increase in October.

The PCE chain price index was unchanged after an unrevised 0.2% decline in October. Prices less food & energy also were unchanged for the first time since 2002. The three month change in core prices fell to 1.8% (AR) and the six month change fell to 2.1%, its lowest this year.

Disappointment in income continued as rental income fell 2.8% (-7.9% y/y) after a downwardly revised 4.7% skid in October. Proprietors' income also rose just 0.1% (2.9% y/y) but October's increase was revised up to 0.6%.

Wage & salary disbursements increased 0.3% (6.3% y/y) although the October increase was lessened a bit to 0.5%. Factory sector wages slipped marginally (+3.9% y/y) following a downwardly revised 0.4% gain while wages in the private service-producing industries rose a moderate 0.4% (6.8% y/y).

Interest income rose 0.4% (6.3% y/y) for the second month and dividend income surged 1.1% (11.7% y/y) for the third month.

Disposable personal income increased 0.3% (5.1% y/y) after a downwardly revised 0.2% October. Personal taxes increased 0.5% (11.8% y/y) after the 1.1% October jump.

Real disposable personal income rose 0.3% (3.2% y/y) last month and the three month growth in real income was 6.4% (AR). Real disposable income per capita rose 0.2% (2.2% y/y) and three month growth was 5.4% (AR).

Personal consumption surged 0.5% after the upwardly revised 0.3% gain during October. Expectations had been for a 0.6% increase. Real consumer spending rose 0.5%, the same as in October.

The personal savings rate was a more negative -1.0% last month and so far in 2006 has averaged -0.9%. Should the Decline in the Personal Saving Rate Be a Cause for Concern? from the Federal Reserve Bank of Kansas City is available here.

Disposition of Personal Income November October Y/Y 2005 2004 2003
Personal Income 0.3% 0.3% 5.9% 5.2% 6.2% 3.2%
Personal Consumption 0.5% 0.3% 5.7% 6.5% 6.6% 4.8%
Savings Rate -1.0% -0.7% -0.3% (Nov. '05) -0.4% 2.0% 2.1%
PCE Chain Price Index 0.0% -0.2% 1.9% 2.9% 2.6% 2.0%
  Less food & energy 0.0% 0.2% 2.2% 2.1% 2.0% 1.4%
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