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Economy in Brief

U.S. Personal Spending Growth Picks Up; Income Gain Moderates
by Tom Moeller  December 22, 2017

Personal consumption expenditures increased 0.6% (4.5% y/y during November following a 0.2% October gain, revised from 0.3%. A 0.4% rise had been expected in the Action Economics Forecast Survey. Adjusted for price inflation, personal spending increased 0.4% (2.7% y/y) after holding steady. Real durable goods purchases rose 0.2% (7.1% y/y) and repeated October's gain. Motor vehicle buying declined 2.6% (+4.2% y/y) after a slight decline. Real spending on home furnishings & appliances jumped 1.7% (9.4% y/y), the third consecutive month of strong increase. Real spending on recreational goods & vehicles surged 2.6% (9.2% y/y) following a 0.3% decline. Constant dollar spending on nondurable items rose 0.7% (3.0% y/y), the strongest increase since March. Real purchases of clothing & footwear strengthened 2.5% (4.9% y/y), the strongest rise since March 2007. Real spending on gasoline & oil eased 0.2% (-1.8% y/y) after a 0.4% slip. Real spending on food & beverages rose 0.5% (2.5% y/y) following a 0.3% rise. Real spending on services gained 0.4% (1.9% y/y) on the heels of a 0.1% slip. Real recreation spending increased 1.0% (2.0% y/y) after a 1.3% fall. Real health care outlays rose 0.2% (2.6% y/y) following a 0.1% uptick, while housing & utilities expenditures improved 0.4% (1.5% y/y) after holding steady.

Personal income rose 0.3% (3.8% y/y) last month following an unrevised 0.4% October gain. A 0.4% rise had been expected. Wages & salaries rose 0.4% (4.5% y/y) following a 0.2% increase. Rental income improved 0.7% (6.3% y/y) after a 1.0% jump. Proprietors' income improved 0.6% (3.3% y/y), about as it has for four straight months. Interest income surged 1.2% (4.2% y/y) for a second consecutive month. Dividend income fell 0.6% (+0.9% y/y) following a 0.1% uptick. Personal transfer receipts fell 0.2% (+3.0% y/y), the first decline since April. Social Security payments declined 0.8% (+3.3% y/y) and reversed October's increase. Medicare payments gained a steady 0.3% (2.9% y/y). Unemployment insurance benefits rebounded 1.1% (-8.5% y/y) following after three months of sharp decline.

Disposable income gained 0.4% (3.7% y/y) for the third straight month. Adjusted for price changes, take-home pay inched 0.1% higher (1.9% y/y) after a 0.3% rise that followed four consecutive months of zero increase.

The personal savings rate declined to 2.9%, the lowest level since November 2007. Personal saving declined by 17.1% y/y.

The PCE chain-type price index improved 0.2% (1.8% y/y) after a 0.1% uptick. Excluding food & energy, prices nudged 0.1% higher (1.5% y/y) following two 0.2% gains. Nondurable goods prices jumped 0.5% (+1.9% y/y) with a 7.0% surge (16.2% y/y) in gasoline prices, which followed a 2.1% decline. Durable goods prices offset some of this increase with a 0.2% decline (-1.5% y/y) after holding steady. The price index for recreational goods & vehicles fell 0.8% (-2.8% y/y) while motor vehicle costs rose 0.3% (-0.4% y/y). Services prices improved 0.2% (2.3% y/y) following two months of 0.3% increase. Moderation in price gains was widely exhibited.

The personal income & consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figure is in the AS1REPNA database.

Personal Income & Outlays (%) Nov Oct Sep Nov Y/Y 2016 2015 2014
Personal Income 0.3 0.4 0.5 3.8 2.4 5.0 5.3
  Wages & Salaries 0.4 0.2 0.5 4.5 2.9 5.1 5.1
Disposable Personal Income 0.4 0.4 0.4 3.7 2.6 4.5 5.1
Personal Consumption Expenditures 0.6 0.2 1.0 4.5 4.0 3.9 4.4
Personal Saving Rate 2.9 3.2 3.0 3.7
(Nov '16)
4.9 6.1 5.7
PCE Chain Price Index 0.2 0.1 0.4 1.8 1.2 0.3 1.5
  Less Food & Energy 0.1 0.2 0.2 1.5 1.8 1.3 1.6
Real Disposable Income 0.1 0.3 0.0 1.9 1.4 4.2 3.6
Real Personal Consumption Expenditures 0.4 0.0 0.6 2.7 2.7 3.6 2.9
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