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Economy in Brief

U.S. Personal Income Tumbles, But Spending Inches Up
by Tom Moeller  March 01, 2013

Personal income slumped 3.6% last month (+2.2% y/y) after an unrevised 2.6% December jump. A 2.1% decline was the consensus expectation. Last month's fall was due to a one-third drop (-3.3% y/y) in dividend earnings. Income, other than from dividends, also was down by 1.1% (+2.5% y/y). That decline reflected a 0.6% drop (+2.9% y/y) in wage & salaries following a 0.7% December rise. Adding to last month's decline was a 0.3% fall (+1.6% y/y) in interest income. Offsetting these declines was rental income which jumped 2.3% (13.0% y/y) while transfer receipts rose 0.3% (3.5% y/y). 

Despite the drop in income, consumers raised spending by an expected 0.2% (3.2% y/y). That followed a 0.1% December uptick. Leading last month's spending was a 0.4% rise in services outlays. Offsetting the gain was a 0.8% decline (+5.4% y/y) in spending on durable goods and no change (+2.1% y/y) in nondurables purchases.

With the slump in income and the modest gain in spending, the personal savings rate fell to 2.4% and retraced its earlier rise.

The PCE chain price index was unchanged (+1.2% y/y) for the second consecutive month. Nondurables prices fell 0.3% (+1.0% y/y). Durable goods prices were unchanged (-1.6% y/y) and services prices ticked up 0.1% (1.8% y/y). Excluding food & energy, the price index gained 0.1% (1.3% y/y).  

Adjusted for price changes, disposable income slumped 4.0% (+0.6% y/y) and real spending inched up 0.1% (2.0% y/y) during January.

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

 

Personal Income & Outlays (%) Jan Dec Nov Y/Y 2012 2011 2010
Personal Income -3.6 2.6 1.0 2.2 3.5 5.1 3.8
  Wages & Salaries -0.6 0.7 1.1 2.9 3.3 4.0 2.1
Disposable Personal Income -4.0 2.7 1.0 1.8 3.3 3.8 3.8
Personal Consumption Expenditures 0.2 0.1 0.4 3.2 3.7 5.0 3.8
Personal Saving Rate 2.4 6.4 4.0 3.7
(Jan'12)
3.9 14.2 5.1
PCE Chain Price Index 0.0 -0.0 -0.2 1.2 1.7 2.4 1.9
  Less Food & Energy 0.1 0.0 0.1 1.3 1.7 1.4 1.5
Real Disposable Income -4.0 2.7 1.2 0.6 1.5 1.3 1.8
Real Personal Consumption Expenditures 0.1 0.1 0.5 2.0 1.9 2.5 1.8
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