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Economy in Brief

U.S. Personal Income Firm, Spending Light
by Tom Moeller January 31, 2008

Personal income slightly beat Consensus expectations last month with a 0.5% rise. Three-month growth in income totaled 4.4% (AR), a growth rate that has been roughly steady.

Wage & salary income rose 0.4% (4.8% y/y) after a 0.6% November rise. Three-month growth amounted to 4.1% which has been a roughly steady rate of growth. Factory sector wages, however, fell 0.3% (+0.9% y/y) after rising 0.3% during the prior month.Wage & salary income in the private service-providing industries rose 0.5% (5.8% y/y). Wages in the government sector again increased 0.3% (4.8% y/y).

Lower interest rates caused the third straight 0.3% decline in interest income (+6.7% y/y). Dividend income held steady at 0.9% (12.4% y/y).

Personal current taxes rose 0.5% (7.1% y/y. That y/y growth rate is less than one half the rate of rise during 2005. That left disposable personal income to rise 0.5% (5.6% y/y). Adjusted for inflation, disposable personal income increased 0.2% (2.1% y/y). The three-month growth in remained negative at -0.5%.

Personal consumption expenditures rose a hair more than the Consensus expectation for a 0.1% uptick. The 0.2% rise, however, left spending real spending during December down slightly and the three-month growth rate fell to 1.3%, its lowest since July.

Spending on discretionary items slipped as real spending on autos (-0.4% y/y) fell for the third straight month. Growth in real spending on household furniture & appliances also fell back to 0.1% (7.1 y/y) after a 1.5% pop in November. Spending on apparel, however, was quite weak and fell 2.0% (+1.8% y/y). Medical care spending rose 0.3% (2.8% y/y. The detailed spending figures are available in Haver's USNA database.

The PCE chain price index rose 0.2% after the 0.6 surge during November. The gain in the core PCE price index held steady for the third month at 0.2%. However, the three-month growth in core prices recently has been far from steady, rising to 2.7% from its low in May due to faster growth in services prices.

IMF Sees World Growth Slowing, With U.S. Marked Down from the International Monetary Fund can be found here.

Disposition of Personal Income December November Y/Y 2007 2006 2005
Personal Income 0.5% 0.4% 5.8% 6.2% 6.6% 5.9%
Personal Consumption 0.2% 1.0% 5.7% 5.5% 5.9% 6.2%
Saving Rate 0.2% 0.0% 0.3% (Dec. 06) 0.5% 0.4% 0.5%
PCE Chain Price Index 0.2% 0.6% 3.5% 2.5% 2.8% 2.9%
  Less food & energy 0.2% 0.2% 2.2% 2.1% 2.2% 2.2%
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