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Economy in Brief

U.S. Personal Income, Spending and Prices Fall; Savings Remain Lean
by Tom Moeller  May 31, 2013

Personal income moved marginally lower during April (2.8% y/y) following a 0.3% March advance, initially reported as 0.2%. The income figure fell short of consensus expectations for a 0.2% increase. No change in wages and salaries (3.2% y/y) followed a 0.2% increase. Rental income ticked up 0.1% (14.7% y/y) but proprietors income reversed earlier strength and fell 0.7% (+6.2% y/y). Dividend income remained firm with a 1.0% rise (8.4% y/y). A 0.5% advance (-0.5% y/y) in interest income followed three consecutive months of 0.9% decline. Transfer receipts were off 0.6% (+2.7% y/y). Notable was the 3.0% drop (-30.8% y/y) in jobless insurance benefits.

A 0.2% decline (+2.8% y/y) in personal consumption expenditures followed March's 0.1% uptick. No change in spending was expected. Lower prices prompted an 8.4% decline (-10.6% y/y) in spending on gasoline. Consumers took the money and spent it on clothing, up 1.0% (4.0% y/y), and furniture & appliances, up 0.7% (4.6% y/y). Motor vehicle expenditures slipped marginally (+8.5% y/y), off for the third consecutive month. Services spending ticked up 0.1% (3.2% y/y), bolstered by a 0.9% jump (5.5% y/y) in outlays at restaurants & hotels.

The personal savings rate held stable at a low 2.5%. The level remained well below the 3.5% rate 12 months ago and the 4.0%-to-5.5% averages of the prior four years.

The PCE chain price index declined 0.3% (+0.7% y/y) pulled lower by a 7.7% drop (-8.0% y/y) in gasoline & energy prices. Elsewhere, durable goods prices fell 0.3% (-1.8% y/y) while apparel prices were off the same 0.3% (+0.3% y/y). Food prices ticked up another 0.1% (1.1% y/y) while services prices also inched up 0.1% (1.7% y/y). The price index excluding food & energy was unchanged (1.1% y/y).  

Adjusted for price changes, disposable income during April ticked up 0.1% (1.0% y/y) while real spending also inched up 0.1% (2.1% 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.

Estimating the Trend Rate of Economic Growth Using the CFNAI from the Federal Reserve Bank of Chicago can be found here.

 

Personal Income & Outlays (%) Apr Mar Feb Y/Y 2012 2011 2010
Personal Income -0.0 0.3 1.2 2.8 3.5 5.1 3.8
  Wages & Salaries 0.0 0.2 0.7 3.2 3.3 4.0 2.1
Disposable Personal Income -0.1 0.2 1.2 1.7 3.3 3.8 3.8
Personal Consumption Expenditures -0.2 0.1 0.8 2.8 3.7 5.0 3.8
Personal Saving Rate 2.5 2.5 2.4 3.5
(Apr'12)
3.9 14.2 5.1
PCE Chain Price Index -0.3 -0.1 0.4 0.7 1.7 2.4 1.9
  Less Food & Energy 0.0 0.1 0.1 1.1 1.7 1.4 1.5
Real Disposable Income 0.1 0.3 0.8 1.0 1.5 1.3 1.8
Real Personal Consumption Expenditures 0.1 0.2 0.4 2.1 1.9 2.5 1.8
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