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Economy in Brief

U.S. Personal Spending Increases As Income Steadies
by Tom Moeller  November 27, 2019

Personal consumption expenditures rose 0.3% (3.7% y/y) during October after an unrevised 0.2% September rise. The increase matched expectations in the Action Economics Forecast Survey. In constant dollars, spending edged 0.1% higher (2.3% y/y) following two 0.2% monthly increases. Constant dollar spending on services provided the lift to consumption last month with a 0.2% rise (1.6% y/y). Real outlays on housing & utilities gained 0.3% (1.1% y/y) while real transportation services usage rose 0.2% (2.8% y/y) after declining 0.3%. Constant dollar spending on food services & hotels rose 0.2% (1.5% y/y) after a 0.3% rise. Real health care outlays also improved 0.2% (3.1% y/y) for the third straight month. Constant dollar recreation services expenditures declined 0.3% (+0.5% y/y), off for the third month in the last four. These gains were offset by a 0.8% decline (+5.2% y/y) in constant dollar spending on durable goods after a 1.1% jump. The declined reflected a 2.7% easing (+1.8% y/y) in real motor vehicle buying, the third decline in four months. Outlays on recreational vehicles strengthened 0.7% (11.6% y/y) after slipping 0.1% in September. Constant dollar demand for home furnishings & appliances rebounded 0.5% (3.8% y/y) after a 0.5% fall. Real nondurable goods outlays rose 0.2% (3.2% y/y) after a 0.1% slip. Clothing & footwear demand in constant dollars jumped 1.8% (3.1% y/y) after a 0.1% uptick. Real food & beverage purchases gained 0.2% (2.2% y/y) as did gasoline demand (1.5% y/y).

Personal income was unchanged (4.4% y/y) in October following a 0.3% rise. A 0.3% rise was expected. Wages & salaries improved 0.4% (4.9% y/y) after a 0.1% uptick. Proprietors income fell 1.0% (+5.0% y/y), the first decline in nine months. Rental incomes improved 0.6% (2.3% y/y) after three straight months of slight increase, but receipts on assets fell 1.0% (+0.6% y/y) due to a 1.7% decline (-1.0% y/y) in interest income, the third drop in four months. Transfer receipts improved 0.3% (7.2% y/y) after a 0.2% rise.

Personal disposable income eased 0.1% in October (+4.1% y/y) after rising 0.3% in September. Adjusted for inflation, take-home pay fell 0.3% (+2.8% y/y) and reversed September's increase.

Last month's strength in spending relative to the gain in income lowered the personal savings rate to 7.8% from 8.1%. The level of personal saving rose 10.1% y/y last month.

The PCE chain price index increased 0.2% (1.3% y/y) following two months of stability. The price index excluding food & energy edged 0.1% higher but the y/y increase fell to 1.6%. Energy prices increased 2.6% (-4.2% y/y) after two months of decline. Food prices improved 0.2% (1.1%) following September's stability.

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 (%) Oct Sep Aug Oct Y/Y 2018 2017 2016
Personal Income 0.0 0.3 0.5 4.4 5.6 4.7 2.6
  Wages & Salaries 0.4 0.1 0.6 4.9 5.0 4.7 2.9
Disposable Personal Income -0.1 0.3 0.6 4.1 6.1 4.7 2.8
Personal Consumption Expenditures 0.3 0.2 0.2 3.7 5.2 4.4 3.8
Personal Saving Rate 7.8 8.1 8.0 7.3 (Oct '18) 7.7 7.0 6.8
PCE Chain Price Index 0.2 -0.0 0.0 1.3 2.1 1.8 1.0
  Less Food & Energy 0.1 0.0 0.1 1.6 2.0 1.6 1.6
Real Disposable Income -0.3 0.3 0.6 2.8 4.0 2.9 1.8
Real Personal Consumption Expenditures 0.1 0.2 0.2 2.3 3.0 2.6 2.7
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