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Economy in Brief

U.S. Personal Spending and Earnings Increase
by Tom Moeller  October 31, 2019

Consumers remain in a mood to spend. Personal consumption expenditures improved 0.2% (3.9% y/y) during September, the same as in August which was revised from 0.1%. A 0.3% gain had been expected in the Action Economics Forecast Survey. In constant dollars, spending also rose 0.2% (2.6% y/y) for the second straight month. Constant dollar spending on durable goods increased 0.6% (5.7% y/y) for a second month as well. The gain was led by a 1.4% rebound (2.5% y/y) in motor vehicle outlays after two months of decline. Outlays on recreational vehicles eased 0.1% (+11.8% y/y) after rising 0.8% and constant dollar demand for home furnishings & appliances fell 0.4% (+2.9% y/y). Real nondurable goods outlays rose 0.3% (4.0% y/y) after a 0.2% gain. Clothing & footwear demand in constant dollars rose 0.8% (3.2% y/y) and recouped the August shortfall. Real food & beverage purchases eased 0.1% (+ 2.9% y/y) but gasoline demand rose 0.8% (2.1% y/y). Real services outlays edged 0.1% higher for the fourth consecutive month. The 1.7% y/y rise compares to 3.2% y/y as of August of last year. The overall change was held back by spending at restaurants & hotels which declined 0.4% (+1.3% y/y) in constant dollars after easing 0.1%. Real expenditures on transportation services fell 0.2% (+3.1% y/y). To the upside, real housing & utilities demand, the largest services category, edged 0.1% higher (0.8% y/y). Real recreation services outlays strengthened 0.4% (1.9% y/y) after holding steady in August. Real health care services outlays rose 0.2% (2.6% y/y).

Personal income improved 0.3% (4.9% y/y) in September following a 0.5% rise. Wages & salaries held steady (5.2% y/y) after a 0.6% strengthening in August. Proprietors income rose 0.4% (7.1% y/y) after surging 2.3%. Rental incomes were unchanged (1.4% y/y) for the third straight month, but receipts on assets strengthened 0.9% (1.8% y/y) following two months of decline. Transfer receipts improved 0.3% (7.3% y/y), the same as during the prior two months. Personal disposable income rose 0.3% in September (4.9% y/y) after surging 0.6% in August. Adjusted for inflation, take-home pay also improved 0.3% (3.5% y/y) after rising 0.5%.

Last month's strength in disposable income relative to the gain in spending lifted the personal savings rate to 8.3%, its highest level in six months. The level of personal saving rose 16.6% y/y in September.

Price inflation as measured by the PCE chain price index was steady (1.3% y/y) for the second consecutive month. The price index excluding food & energy also was unchanged and the y/y increase eased to 1.7%. Energy prices declined 1.3% (-4.8% y/y), down for a second consecutive month. Food prices held steady (0.8% y/y) following three straight months of decline.

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 (%) Sep Aug Jul Sep Y/Y 2018 2017 2016
Personal Income 0.3 0.5 0.1 4.9 5.6 4.7 2.6
  Wages & Salaries 0.0 0.6 0.2 5.2 5.0 4.7 2.9
Disposable Personal Income 0.3 0.6 0.2 4.9 6.1 4.7 2.8
Personal Consumption Expenditures 0.2 0.2 0.5 3.9 5.2 4.4 3.8
Personal Saving Rate 8.3 8.1 7.8 7.5 (Sep'18) 7.7 7.0 6.8
PCE Chain Price Index -0.0 0.0 0.2 1.3 2.1 1.8 1.0
  Less Food & Energy 0.0 0.1 0.2 1.7 2.0 1.6 1.6
Real Disposable Income 0.3 0.5 -0.0 3.5 4.0 2.9 1.8
Real Personal Consumption Expenditures 0.2 0.2 0.3 2.6 3.0 2.6 2.7
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