Individuals felt the need to bolster savings account balances and pared back spending during January. Additions to savings were aided by tax cuts.

Personal consumption expenditures gained 0.2% (4.4% y/y) during January following an unrevised 0.4% December rise. It was the smallest monthly increase since August. The gain matched expectations in the Action Economics Forecast Survey. Adjusted for price inflation, personal spending eased 0.1% (+2.7% y/y) after a 0.2% rise. Real durable goods purchases retreated 1.6% (+7.1% y/y) after a 0.6% gain. Motor vehicle buying decreased 3.1% (+4.7% y/y) after a 1.8% rise. Real spending on home furnishings & appliances fell 0.6% (+8.2% y/y) following a 0.1% dip. Real spending on recreational goods & vehicles fell 0.7% (+10.3% y/y) following strong gains in the two prior months. Constant dollar spending on nondurable items held steady (+2.9% y/y) after a 0.4% decline. Real purchases of clothing & footwear retreated 1.2% (+3.5% y/y), off for the second straight month. Real spending on food & beverages eased 0.1% (+2.8% y/y) following a 0.3% rise. Real spending on gasoline & oil rose 2.0% (2.0% y/y) and reversed the December fall. Real spending on services ticked 0.1% higher (2.0% y/y), the weakest gain in three months. Real recreation spending dropped 1.4% (-0.3% y/y) after a 0.2% rise. Real health care outlays eased slightly (+2.4% y/y) following a 0.2% increase, while housing & utilities expenditures slipped 0.1% (+2.0% y/y) after a 0.6% strengthening.

The personal savings rate increased to 3.2%, the highest level since August. That was up from December's roughly twelve-year low of 2.5%.

The vehicle for raising savings was lower tax payments, as well as bonus income, which helped raise disposable income by 0.9% (4.0% y/y) after a 0.4% gain. Adjusted for price changes, take-home pay improved 0.6% (2.3% y/y) after a 0.2% rise.

Personal income rose 0.4% (3.8% y/y) for a second consecutive month. A 0.3% rise had been expected. Wages & salaries rose 0.5% (4.6% y/y) following a 0.4% increase. Rental income also rose 0.5% (5.8% y/y) after a 0.4% rise. Proprietors' income gained 0.2% (2.1% y/y) following a 0.2% decline. Interest income fell 0.4% (+3.8% y/y) after three straight months of 1.3% increase. Dividend income fell 0.4% (+2.7% y/y), down for the third straight month. Personal transfer receipts jumped 1.3% (3.1% y/y), the strongest rise in twelve months. Social Security payments surged 2.5% (5.0% y/y), also the strongest rise since January 2017. Medicare payments ticked 0.1% higher (2.7% y/y) and veterans benefits strengthened 2.9% (8.4% y/) after declines in two of the prior three months. Unemployment insurance benefits rose 1.1% (-7.8% y/y) following no change in December.

The PCE chain-type price index strengthened 0.4% (1.7% y/y), the largest rise since September. Excluding food & energy, prices increased 0.3% (1.5% y/y), the strongest rise in twelve months. Nondurable goods prices jumped 1.0% (1.4% y/y) as gasoline & energy prices strengthened 5.7% (8.9% y/y). That followed a 0.6% dip. Durable goods prices ticked 0.1% higher (-2.3% y/y), the first increase in twelve months. The price index for recreational goods & vehicles rose 0.3% (-3.2% y/y) while motor vehicle costs slipped 0.1% (-1.5% y/y). Clothing & footwear prices rose 2.0% (-0.8% y/y) following four straight months of decline. Services prices improved 0.2% (2.4% y/y) for a third straight month. Health care costs rose 0.6% (2.0% y/y) following two months of little change.

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.