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Economy in Brief

U.S. Personal Income & Spending Are Firm
by Tom Moeller  March 29, 2013

Improvement in income is encouraging consumers to keep spending. Personal income jumped 1.1% last month (2.6% y/y) after a little-revised 3.7% January decline. The rise easily outpaced consensus expectations for a 0.7% increase. Last month's outsized gain in overall income stemmed from a 2.0% rise (12.7% y/y) in rental incomes (12.7% y/y). Proprietors income also was solid and increased 1.0% (5.5% y/y). Wage & salaries grew 0.6% (2.7% y/y) following a 0.6% January decline. These gains were partially offset by a 1.2% drop (+0.1% y/y) in interest earnings. 

With the solid gain in income, consumers increased spending by an expected 0.7% (3.3% y/y). This followed an upwardly revised 0.4% January rise. The jump in gasoline prices last month prompted an 8.1% surge (4.1% y/y) in outlays on fuel. However, consumers pulled back on the number of gallons bought and real outlays on gasoline slipped 0.4% (+1.0% y/y). Outlays on food & beverages also jumped 1.1% (2.1% y/y) and the strength of the m/m increase reflected real consumption's jump. In the discretionary spending categories, motor vehicle outlays slipped 0.2% (+7.9% y/y) while furniture and appliance spending gained 0.2% (2.7% y/y). Clothing spending rose 0.4% (2.5% y/y) and spending on services gained 0.4% (3.1% y/y).

The strength in income growth relative to the monthly rise in spending raised the personal savings rate to 2.6% from 2.2%. These figures remained, however, well below the 4.0%-to-5.5% averages of the prior four years.

The PCE chain price index gained 0.4% (1.3% y/y) following no change during the prior two months. An 8.5% rise (3.1% y/y) in the chain price index for gasoline & energy provided the strength behind pricing power in February. Elsewhere, durable goods prices slipped 0.1% (-1.7% y/y) as all categories showed price declines. In the nondurables area, apparel prices slipped 0.1% (+3.0% y/y) but food prices gained 0.2% (1.2% y/y). Services prices inched 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 during February rose 0.7% (0.9% y/y) and real spending gained 0.3% (2.0% y/y).

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 (%) Feb Jan Dec Y/Y 2012 2011 2010
Personal Income 1.1 -3.7 2.6 2.6 3.5 5.1 3.8
  Wages & Salaries 0.6 -0.6 0.7 2.7 3.3 4.0 2.1
Disposable Personal Income 1.1 -4.0 2.7 2.3 3.3 3.8 3.8
Personal Consumption Expenditures 0.7 0.4 0.2 3.3 3.7 5.0 3.8
Personal Saving Rate 2.6 2.2 6.5 3.5
(Feb'12)
3.9 14.2 5.1
PCE Chain Price Index 0.4 0.0 0.0 1.3 1.7 2.4 1.9
  Less Food & Energy 0.1 0.2 0.0 1.3 1.7 1.4 1.5
Real Disposable Income 0.7 -4.0 2.7 0.9 1.5 1.3 1.8
Real Personal Consumption Expenditures 0.3 0.3 0.2 2.0 1.9 2.5 1.8
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