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Economy in Brief

U.S. Personal Income & Spending Post A Negligible Gain
by Tom Moeller December 23, 2011

November was a month of depressed gains for consumer income & outlays. Personal income ticked up just 0.1% following an unrevised 0.4% October increase. The figure disappointed Consensus expectations for a 0.3% rise. A slip in wage & salary disbursements (+3.4% y/y) accounted for much of the slack increase. In addition proprietors' income fell 0.3% (+2.7% y/y) but rental income rose 2.1% (21.0% y/y). Interest income gained 0.2% (-0.3% y/y) and dividend income rose 0.5% (8.3% y/y). Disposable income was essentially unchanged (+2.4% y/y). Adjusted for price inflation, disposable income also was roughly unchanged (-0.1% y/y).

Personal consumption expenditures also rose just 0.1% (4.3% y/y) for the second consecutive month. Expectations had been for a 0.3% rise. The increase was held back by a 0.3% decline in nondurables which reflected lower gasoline prices. Spending of clothing rose 0.6% (4.0% y/y). For durables, motor vehicle outlays rose 0.8% (8.9% y/y) and spending on furniture gained 0.5% (4.9% y/y). Adjusted for price inflation spending rose 0.2% (1.7% y/y).

The personal savings rate remained depressed at 3.5%. October's rate was revised to 3.6% from 3.5% reported last month but the savings rate remained down from the 8.3% monthly peak reached in 2008.

The PCE chain price index slipped marginally last month (+2.5% y/y) paced by a 2.3% drop (+19.8%) drop in gasoline prices. The core PCE price deflator again rose marginally m/m. The y/y increase of 1.7% was up from the record-low 12-month change of 0.9% reached last December. Notable amongst the categories last month was a 5.0% y/y gain in food & beverage costs and a 4.6% y/y rise in clothing prices. In the durables sector recreational goods prices posted a 7.0% y/y drop including a greater decline in video & audio equipment. Motor vehicle prices rose 3.4% y/y, appliance prices rose 1.7% y/y but furniture costs slipped 0.5%.

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

Personal Income &
Outlays (%)
Nov Oct Sep Y/Y 2010 2009 2008
Personal Income 0.1 0.4 0.2 3.9 3.7 -4.3 4.6
  Wages & Salaries -0.1 0.6 0.4 3.4 2.2 -4.3 2.0
Disposable Personal
Income
-0.0 0.2 0.1 2.4 3.6 -2.1 5.8
Personal Consumption
Expenditures
0.1 0.1 0.7 4.3 3.8 -1.7 2.7
Saving Rate 3.5 3.6 3.5 5.1
(Nov'10)
5.3 5.1 5.4
PCE Chain Price Index -0.0 -0.1 0.2 2.5 1.8 0.2 3.3
  Less Food & Energy 0.1 0.1 0.0 1.7 1.4 1.6 2.3
Real Disposable
Income
-0.0 0.3 -0.1 -0.1 1.8 -2.3 2.4
Real Personal Consumption
Expenditures
0.2 0.2 0.5 1.7 2.0 -1.9 -0.6
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