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Economy in Brief

U.S. Personal Income & Spending Turn Positive in May; Saving Rate Higher
by Carol Stone  June 27, 2012

Personal income regained its footing in May with a 0.5% gain; April's move, originally reported as down very marginally, was revised to a 0.1% rise. Year-on-year, income was up 3.3%, compared to the 2.8% reported last month for April. Consensus expectations were looking for 0.2% on the month. Wages and salaries were up 0.3% in May (3.7% y/y), following 0.1% in April, which was originally reported as flat. The stronger income total came from gains in dividend income, 1.6% on the month (8.0% y/y), interest income, 1.9% m/m (2.3% y/y) and transfer payments, which rebounded by 0.8% m/m (3.4% y/y) after April's 0.6% decline. In the last item, Social Security and Medicare had upturns following declines in April; unemployment insurance extended its recent downtrend. Rental income and proprietors' income both ticked lower by 0.1% in May, with rental income up 13.4% on the year and proprietors' income 6.3%.

Personal consumption expenditures also regained their footing in May, increasing 0.3% (2.9% y/y) after April's 0.3% fall, a revision from 0.2% reported a month ago. The result was in line with the Consensus forecast of 0.3%. Durable goods outlays picked up by 0.9% (6.7% y/y), after two monthly decreases; motor vehicle purchases in particular were up 1.0% after edging lower for three months. Outlays on nondurable goods rose 0.3% (1.5% y/y) after the food and energy-driven decline of 1.6% in April; in May there were modest upturns in both food and gasoline items. Spending on services edged up just 0.1% (2.7% y/y) after being unchanged in April.

The personal saving rate rose to 3.2% in May, and April's figure was revised to 3.0% from 2.5% in the initial report. It was 3.9% in May 2012.

The PCE chain price index increased 0.1% in May (1.0% y/y) after April's 0.3% decline. Energy goods and services prices rose 0.2% after their drop in April of 4.5%; Gasoline prices continued lower modestly, but other energy costs rose markedly, especially natural gas for household utilities, which was up 2.4% (16.6% y/y). Elsewhere, durable goods prices were down 0.1% (-1.9% y/y) while apparel prices rose 0.2% (unchanged y/y). Food prices decreased 0.2% (+1.0% y/y) while services prices also were up 0.2% (1.8% y/y), including the natural gas item. The overall price index excluding food & energy was up 0.1% (1.0% y/y).

Adjusted for price changes, disposable income gained 0.4% in May (1.1% y/y) while real spending rose 0.2% (1.8% 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 (%) May Apr Mar Y/Y 2012 2011 2010
Personal Income 0.5 0.1 0.2 3.3 3.7 5.1 3.8
  Wages & Salaries 0.3 0.1 0.2 3.7 3.7 4.0 2.1
Disposable Personal Income 0.5 0.1 0.2 2.9 3.5 3.8 3.8
Personal Consumption Expenditures 0.3 -0.3 0.2 2.9 3.6 5.0 3.8
Personal Saving Rate 3.2 3.0 2.6 3.9
(May'12)
3.9 14.2 5.1
PCE Chain Price Index 0.1 -0.3 -0.1 1.0 1.8 2.4 1.9
  Less Food & Energy 0.1 0.0 0.1 1.1 1.7 1.4 1.5
Real Disposable Income 0.4 0.3 0.8 1.1 1.7 1.3 1.8
Real Personal Consumption Expenditures 0.2 -0.1 0.3 1.8 1.9 2.5 1.8
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