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Economy in Brief

U.S. Personal Income Gain Helps Stabilize Savings Drawdown
by Tom Moeller  April 30, 2012

Consumers adopted a more conservative approach to their income last month. Personal income increased 0.4% (3.2% y/y) during March after a 0.3% February increase, last month reported as 0.2%. Last month's increase reflected a 0.3% rise (4.4% y/y) in wages and salaries after three months of 0.4% increase. Rental income surged 0.9% (11.8% y/y) as home renting remained strong relative to ownership. Proprietors' income increased 0.6% (3.3% y/y). Lower interest rates continued to weigh on interest income which rose 0.3% for the third straight month, but it fell 2.3% y/y. Conversely, dividend income jumped 0.7% (6.2% y/y) with strong corporate profitability.

Individuals enabled the income gain to stabilize the earlier draw-down of savings. The personal savings rate ticked up to 3.8% from an unrevised 3.7% during February. Nevertheless, it remained below the 4.9% level twelve months ago and at a 2010 monthly high of 5.8%.

Growth in personal consumption expenditures eased to just 0.1% following a 0.5% February increase, revised from 0.8%. Last month's weakness reflected a 2.2% decline (+13.1% y/y) in motor vehicle purchases which was a breather after several months of strong gain. Conversely, furniture expenditures rose a strong 1.0% (6.8% y/y) and clothing spending increased 0.5% (5.9% y/y). Higher gasoline prices increased purchases by 3.6% but less driving & more fuel efficient vehicles limited the y/y gain to 3.5%. Purchases fell 2.7% y/y when adjusted for higher prices. Spending on services inched up 0.1% (3.3% y/y), the y/y gain boosted by 7.2% y/y growth in recreation and a 6.3% annual rise in food services & accommodations as they traveled more.

The PCE chain price index rose 0.2% an easier last month (2.1% y/y). The increase reflected a 1.7% rise (6.4% y/y) in gasoline prices after a 5.7% February increase. The core PCE price index increased 0.2% and the y/y increase of 2.0% was up from the record low 12-month change of 0.9% reached last December.

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(%) Mar Feb Jan Y/Y 2011 2010 2009
Personal Income 0.4 0.3 0.3 3.2 5.1 3.7 -4.3
 Wages & Salaries 0.3 0.4 0.4 4.4 4.3 2.2 -4.3
Disposable Personal
Income
0.4 0.2 0.1 2.8 3.8 3.6 -2.1
Personal Consumption
Expenditures
0.1 0.5 0.3 1.8 4.7 3.8 -1.7
Personal Saving Rate 3.8 3.7 4.3 4.9
(Mar.'11)
4.7 5.3 5.1
PCE Chain Price Index 0.2 0.3 0.2 2.1 2.5 1.8 0.2
 Less Food & Energy 0.2 0.1 0.2 2.0 1.4 1.4 1.6
Real Disposable
Income
0.2 -0.1 -0.1 0.6 1.3 1.8 -2.3
Real Personal Consumption
Expenditures
0.1 0.5 0.3 1.8 2.2 2.0 -1.9
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