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Economy in Brief

U.S. Personal Spending Growth Is Negligible; Incomes Rise Modestly
by Tom Moeller  March 29, 2019

Personal consumption expenditures improved 0.1% (3.7% y/y) during January following a 0.6% December decline, revised from -0.5%. The gain fell short of a 0.3% rise expected in the Action Economics Forecast Survey. The Commerce Department did not publish February consumption figures due to the partial government shutdown. The figures will be available on April 29.

Durable goods spending was dragged 1.2% lower (0.0% y/y) by a 5.3% decline (-3.7% y/y) in motor vehicle purchases. The decline was countered by a 1.4% rise (1.8% y/y) in purchases of recreational goods & vehicles. Spending on home furnishings & appliances rose 0.9% (2.4% y/y). Spending on nondurable goods gained 0.3% (1.4% y/y) despite a 5.1% drop (-11.0% y/y) in gasoline purchases, pulled downward by a decline in prices. Adjusted for the price decline, gasoline purchases rose 0.9% (0.2% y/y). Food & beverage buying jumped 1.1% (3.1% y/y) and reversed the December decline, while apparel spending increased 0.2% (2.2% y/y). Services spending rose 0.2% (4.9% y/y), the weakest rise since February of 2018. Recreation services purchases fell 0.6% (+2.6% y/y) but spending at restaurants gained 0.4% (5.7% y/y). Housing & utilities consumption also rose 0.4% (4.2% y/y) while health care spending rose 0.3% (4.0% y/y).

The personal saving rate eased to 7.5% during January from 7.7%. These levels were the highest since Q1'18. Personal saving rose 12.1% y/y.

Unlike the consumption figures, the income data are up to date. Personal income rose 0.2% (4.2% y/y) during February after a 0.1% slip in January. A 0.3% rise had been expected. Wages and salaries rose a steady 0.3% (4.2% y/y). Rental income strengthened 0.9% (4.2% y/y) while proprietors' incomes improved 0.7% (4.7% y/y). Transfer payments rose 0.4% (6.8% y/y) as Medicare receipts jumped 1.0% (9.7% y/y), about as they have for several months. Social security receipts rose 0.2% (6.8% y/y) following a 3.1% jump. Jobless insurance payments gained 0.4% (-7.6% y/y) following three months of strong increase.

In constant dollars, personal disposable income declined 0.2% (3.0% y/y) in January and personal spending inched 0.1% higher (2.3% y/y).

The PCE chain price index eased 0.1% (+1.4% y/y) in January after a 0.1% gain, while excluding food & energy, the index rose 0.1% (1.8% y/y). Energy prices fell 3.2% (-6.4% y/y), down for the third straight month, while food prices improved 0.2% (0.8% y/y).

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.

Global Shocks and the U.S. Economy is the title of yesterday's speech by Fed Vice Chair Richard H. Clarida and it can be found here here.

Personal Income & Outlays (%) Feb Jan Dec Y/Y 2018 2017 2016
Personal Income 0.2 -0.1 1.0 4.2 4.5 4.4 2.6
  Wages & Salaries 0.3 0.3 0.5 4.2 4.5 4.6 2.9
Disposable Personal Income 0.2 -0.2 1.1 4.3 5.0 4.4 2.8
Personal Consumption Expenditures -- 0.1 -0.6 3.7 4.7 4.3 3.8
Personal Saving Rate -- 7.5 7.7 7.0 (Jan '18) 6.8 6.7 6.7
PCE Chain Price Index -- -0.1 0.1 1.4 2.0 1.8 1.1
  Less Food & Energy -- 0.1 0.2 1.8 1.9 1.6 1.7
Real Disposable Income -- -0.2 1.0 3.0 2.9 2.6 1.7
Real Personal Consumption Expenditures -- 0.1 -0.6 2.3 2.6 2.5 2.7
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