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Economy in Brief

U.S. Personal Income Gains But Spending Slows
by Tom Moeller  April 29, 2011

Personal income rose 0.5% during March following a 0.4% February increase, initially reported as 0.3%. A 0.4% gain had been expected. Disposable personal income gained 0.6%.

Like last month, the increase in income was paced by a strong 2.7% rise (12.1% y/y) in rental income. Growth in wages & salaries remained moderate at 0.3% (4.4% y/y) while proprietors' income grew 0.4% (6.4% y/y). Economic improvement raised March dividend income by 1.1% (7.3% y/y) while interest income ticked up only 0.1% (0.4% y/y) for the third consecutive month. The personal savings rate held at 5.5%.

Personal consumption expenditures gained 0.6% after a 0.9% February rise, revised up from 0.6%. A 0.5% March increase had been expected. Spending on goods rose 0.6% (7.5% y/y) paced by a 3.9% jump (24.9% y/y) in gasoline & energy. Durables spending rose 0.1% (7.6% y/y) as furniture buying increased 1.6% (3.7% y/y). In constant dollars, personal consumption rose 0.2% last month (2.7% y/y) after a 0.5% February gain.

The PCE chain price index increased 0.4% last month (1.8% y/y), the same as in February. Higher energy costs again accounted for most of the strength with a 3.7% jump (15.3% y/y). Food prices also gained 0.8% (2.9% y/y) for the second straight month. The core PCE price deflator ticked up 0.1% and 0.9% y/y, still near the record low.

The personal income & consumption figures are available in Haver's USECON and USNA databases. The expectations figures are in the AS1REPNA database.

Cap In Hand: The High Price of Higher Education from the Federal Reserve Bank of Atlanta is available here.

Personal Income & Outlays (%) Mar Feb Jan Y/Y 2010 2009 2008
Personal Income 0.5 0.4 1.1 5.3 3.1 -1.7 4.0
  Wages & Salaries 0.3 0.4 0.4 4.4 2.1 -4.3 2.1
Disposable Personal Income 0.6 0.4 0.8 4.6 3.1 0.7 5.1
Personal Consumption
Expenditures
0.6 0.9 0.5 4.6 3.5 -1.0 3.0
Saving Rate 5.5 5.5 5.9 5.3
(Mar.'10)
5.8 5.9 4.1
PCE Chain Price Index 0.4 0.4 0.3 1.8 1.7 0.2 3.3
  Less Food & Energy 0.1 0.2 0.2 0.9 1.3 1.5 2.3
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