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Economy in Brief

U.S. Income, Spending & Savings Each Improved Last Month
by Tom Moeller  December 21, 2012

November was a better month for individuals' income & outlays. Personal income grew 0.6% last month following an unrevised 0.1% October uptick. A 0.3% rise was expected. The gain was the strongest since February and lifted the y/y increase to an improved 4.1%. A strong 0.6% rise (3.7% y/y) in wage & salary income provided lift to income last month. Proprietor's earnings also rose a firm 0.7% (5.2% y/y). Interest income grew 2.0% (0.9% y/y), about the same as it did in October, and earnings from dividends gained 0.8% (8.8% y/y). Disposable income rose a similar 0.6% (4.0% y/y) and adjusted for the decline in prices, take home pay rose 0.8% (2.5% y/y).

Improved earnings were all it took to power the dollar value of personal consumption expenditures. An expected 0.4% (3.5% y/y) rise followed a revised 0.1% October slip, initially reported as -0.2%. A 0.1% increase had been expected. Adjusted for lower prices, spending jumped 0.6% (2.1% y/y), the largest monthly gain since August 2009. Strength in new vehicles purchases, up 5.6% (10.7% y/y), as well as a 0.9% increase (3.9% y/y) in furniture & durable household equipment powered the overall rise. Clothing consumption also gained a real 1.4% (2.2% y/y) but spending on services increased just 0.3% (1.3% y/y).

As growth in income outpaced the rise in spending, the personal savings rate rose to 3.6% from 3.4% in October. For the last year, the rate moved roughly sideways.

The PCE chain price index fell 0.2% (1.4% y/y) as gasoline prices were down 6.8% (+2.0% y/y). Also lower were food & beverage prices, by 0.5% (+2.0% y/y). Less food and energy, the PCE chain price index was unchanged (1.5% y/y). Durable goods prices were off another 0.2% (-1.7% y/y) as recreational goods prices fell 0.5% (-5.9% y/y). Motor vehicle costs ticked up 0.1% (0.5% y/y), furniture prices were unchanged (-0.1% y/y) and clothing prices dropped 0.5% (+2.0% y/y). 

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

 

Personal Income & Outlays (%) Nov Oct Sep Y/Y 2011 2010 2009
Personal Income 0.6 0.1 0.4 4.1 5.1 3.8 -4.8
  Wages & Salaries 0.6 -0.3 0.4 3.7 4.0 2.1 -4.3
Disposable Personal Income 0.6 0.1 0.4 4.0 3.8 3.8 -2.7
Personal Consumption Expenditures 0.4 -0.1 0.8 3.5 5.0 3.8 -1.9
Personal Saving Rate 3.6 3.4 3.3 3.2
(Nov'11)
14.2 5.1 4.7
PCE Chain Price Index -0.2 0.1 0.3 1.4 2.4 1.9 0.1
  Less Food & Energy 0.0 0.1 0.0 1.5 1.4 1.5 1.4
Real Disposable Income 0.8 -0.1 0.1 2.5 1.3 1.8 -2.8
Real Personal Consumption
Expenditures
0.6 -0.2 0.5 2.1 2.5 1.8 -1.9
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