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Economy in Brief

U.S. Personal Income and Spending Gains Slow; Pricing Power Is Weak
by Tom Moeller  December 21, 2018

Personal income rose 0.2% during November (4.2% y/y) following an unrevised 0.5% October increase. A 0.3% gain was expected in the Action Economics Forecast Survey. Leading last month's rise was a 1.0% hop (5.3% y/y) in proprietors' income which came after a 1.3% jump. Wages & salaries rose a lessened 0.2% (4.2% y/y), the weakest rise in six months. Income from assets held steady (3.5% y/y) after a 0.3% rise, reflecting a 0.4% dividend decline (+3.8% y/y) and a 0.3% gain (3.2% y/y) in interest income. Rental income increased 0.5% (4.8% y/y), the same as during October. Transfer payments edged 0.1% higher (5.2% y/y) reflecting a 0.4% decline (+5.7% y/y) in social security payments. Medicare receipts rose 0.9% (7.5% y/y) but Medicaid income inched just 0.1% higher (4.8% y/y). Veterans benefits rose 0.4% (10.9% y/y) while unemployment insurance benefits eased 0.4% (-16.7% y/y).

Disposable personal income gained 0.2% (4.7% y/y) following a 0.5% increase. When adjusted for higher prices, disposable income also rose 0.2% (2.8% y/y).

Personal consumption expenditures improved by a lessened 0.4% last month (4.7% y/y) after a 0.8% increase. A 0.3% rise had been expected. Adjusted for higher prices, personal outlays rose 0.3% (2.8% y/y). Real durable goods outlays increased 0.9% (3.8% y/y) led by a 1.9% rise (8.9% y/y) in recreational goods & vehicles. Home furnishings & appliance buying increased 1.3% (4.1% y/y) but motor vehicle expenditures declined 0.4% (-2.2% y/y). Real outlays on nondurable goods increased 0.6% (3.2% y/y) as fuel outlays edged 0.1% higher (-0.8% y/y). Clothing spending jumped 1.6% (4.6% y/y) and spending at restaurants rose 0.3% (2.7% y/y). Real services outlays gained a lessened 0.2% (2.6% y/y). Spending on housing & utilities rose a steady 0.6% (2.4% y/y) while financial services & insurance payments gained 0.4% (0.9% y/y). Recreation services spending decreased 0.8% (+1.4% y/y) while spending at restaurants fell 0.7% (+3.5% y/y). Health care outlays rose 0.3% (2.9% y/y).

The personal savings rate eased to 6.0%, the lowest level since March 2013. It has been falling steadily since the February high of 7.4%. The level of personal savings increased a paltry 1.7% y/y.

The personal consumption chain price index rose 0.1% (1.8% y/y) after a 0.2% rise. The index excluding food & energy also rose 0.1% (1.9% y/y) for a second month.

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

Personal Income & Outlays (%) Nov Oct Sep Nov Y/Y 2017 2016 2015
Personal Income 0.2 0.5 0.2 4.2 4.4 2.6 4.9
  Wages & Salaries 0.2 0.4 0.3 4.2 4.6 2.9 5.1
Disposable Personal Income 0.2 0.5 0.2 4.7 4.4 2.8 4.4
Personal Consumption Expenditures 0.4 0.8 0.1 4.7 4.3 3.8 4.0
Personal Saving Rate 6.0 6.1 6.3 6.2
(Nov.'17)
6.7 6.7 7.6
PCE Chain Price Index 0.1 0.2 0.1 1.8 1.8 1.1 0.3
  Less Food & Energy 0.1 0.1 0.2 1.9 1.6 1.7 1.3
Real Disposable Income 0.2 0.3 0.1 2.8 2.6 1.7 4.1
Real Personal Consumption Expenditures 0.3 0.6 -0.0 2.8 2.5 2.7 3.7
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