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Economy in Brief

Complicated U.S. Personal Income and Spending Report
by Gerald D. Cohen  March 1, 2019

As a result of the government shutdown the Bureau of Economic Analysis released the delayed December personal income, personal consumption and related prices measures as well as the January personal income data, without outlays and prices.

In January, personal income edged down 0.1% (+4.3% year-on-year) after a 1.0% gain in December. November's gain was revised slightly higher to 0.3% from 0.2%. The Action Economics Forecast Survey expected gains of 0.3% in January and 0.4% in December. Wages & salaries grew 0.3% (4.2% y/y) after a 0.5% rise. Benefits were up 0.3% (3.0% y/y) in January, while transfers jumped 2.6% (6.4% y/y), driven by a 3.1% cost-of-living related spurt in social security payments (6.7% y/y). These gains were more than offset by the 3.4% drop in receipts from assets (+2.8% y/y), some of which was related to a special dividend payment made by VMware Incorporated in December. In addition, proprietors' income slumped 1.6% (+5.3% y/y).

Disposable personal income declined 0.2% (+4.4% y/y) in January following a 1.1% increase. When adjusted for inflation, real disposable income rose 1.0% (3.9% y/y) in December.

Personal consumption expenditures fell a greater than expected 0.5% in December. A 0.1% decline had been anticipated by the Action Economics Forecast Survey. Inflation-adjusted consumption dropped 0.6% (+2.2% y/y) as both goods and services spending decreased 1.4% (+2.4% y/y) and 0.2% (+2.1% y/y) respectively. Spending on goods was weak across the board, while the decline in services reflected a 1.0% drop in housing related expenditures (+0.6% y/y) as well as eating out and hotel stays (-0.9%; +2.5% y/y).

The personal savings rate rebounded to 7.6% in December's from November's five-and-a-half year low of 6.1%. The level of personal savings jumped 28.2% y/y, the fastest growth since early 2014.

The personal consumption chain price index edged up 0.1% (1.7% y/y) in December after an unchanged reading in November (was 0.1%). The index excluding food & energy also rose 0.2% (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 (%) Jan Dec Nov Jan Y/Y 2018 2017 2016
Personal Income -0.1 1.0 0.3 4.3 4.5 4.4 2.6
  Wages & Salaries 0.3 0.5 0.2 4.2 4.5 4.6 2.9
Disposable Personal Income -0.2 1.1 0.3 4.4 5.0 4.4 2.8
  Jan Dec Nov Dec Y/Y 2018 2017 2016
Personal Consumption Expenditures -- -0.5 0.6 4.0 4.7 4.3 3.8
Personal Saving Rate -- 7.6 6.1 6.2 (Dec '18) 6.7 6.7 6.7
PCE Chain Price Index -- 0.1 0.0 1.7 2.0 1.8 1.1
  Less Food & Energy -- 0.2 0.2 1.9 1.9 1.6 1.7
Real Disposable Income -- 1.0 0.2 3.9 2.9 2.6 1.7
Real Personal Consumption Expenditures -- -0.6 0.5 2.2 2.6 2.5 2.7
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