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Economy in Brief

U.S. Personal Spending & Income Gains Slow
by Tom Moeller  January 31, 2020

Personal consumption expenditures improved 0.3% (5.0% y/y) during December following an unrevised 0.4% November rise. The increase matched expectations in the Action Economics Forecast Survey. During all of 2019, consumer spending rose 4.0%, the weakest increase since 2016. In constant dollars, spending edged 0.1% higher (3.3% y/y) last month. For the full year, real spending increased 2.6%, down from a 3.0% gain in 2018. Real durable goods spending declined 0.3% (+7.9% y/y) during December following a 1.2% increase. Spending on motor vehicles fell 2.2% (+1.6% y/y) and reversed most of November's increase. Recreational goods & vehicles outlays rose 0.4% (17.2% y/y) and spending on furniture improved 0.6% (8.0% y/y). Real nondurable goods buying increased 0.2% (4.6% y/y) after a 0.1% uptick. Apparel spending eased 0.1% (+5.5% y/y), off for the second straight month. Real spending on services improved 0.1% (2.3% y/y) following a 0.3% gain. The rise was held back by a 0.3% fall (+1.4% y/y) in spending on housing & utilities. Health care spending rose 0.2% (3.4% y/y) and spending at restaurants & hotels increased 0.5% (2.7% y/y).

Personal income improved 0.2% last month following a 0.4% November increase, revised from 0.5%. A 0.3% rise was expected. Wages & salaries improved 0.3% (5.2% y/y) after two months of 0.4% increase. Proprietors income weakened 1.5% (+1.9% y/y) and reversed November's increase. Rental incomes rose a steady 0.6% (4.0% y/y), and receipts on assets surged 1.0% (-1.4% y/y) due to a 1.6% rise (-0.0% y/y) in personal interest income. Transfer receipts were unchanged (7.0% y/y) following a 0.1% uptick.

Disposable personal income rose 0.2% last month (3.6% y/y) after a 0.4% November increase. Adjusted for price inflation, take-home pay eased 0.1% (+2.0% y/y) after November's 0.3% rise.

Last month's strength in spending relative to the gain in income lessened the personal savings rate to 7.6%, its lowest level since July. The level of personal saving declined 10.4% y/y last month.

The PCE chain price index increased 0.3% (1.6% y/y), the strongest rise since April. The price index excluding food & energy rose 0.2% (1.6% y/y) after four straight months of 0.1% increase. Energy prices improved 1.5% (3.7% y/y) after a 0.8% gain. Food prices held steady (0.8% y/y) for the third month in the last four.

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 (%) Dec Nov Oct Dec Y/Y 2019 2018 2017
Personal Income 0.2 0.4 0.1 3.9 4.5 5.6 4.7
  Wages & Salaries 0.3 0.4 0.4 5.2 4.9 5.0 4.7
Disposable Personal Income 0.2 0.4 -0.0 3.6 4.4 6.1 4.7
Personal Consumption Expenditures 0.3 0.4 0.2 5.0 4.0 5.2 4.4
Personal Saving Rate 7.6 7.8 7.8 8.8 (Dec '18) 8.0 7.7 7.0
PCE Chain Price Index 0.3 0.1 0.2 1.6 1.4 2.1 1.8
  Less Food & Energy 0.2 0.1 0.1 1.6 1.6 2.0 1.6
Real Disposable Income -0.1 0.3 -0.2 2.0 3.0 4.0 2.9
Real Personal Consumption Expenditures 0.1 0.3 0.0 3.3 2.6 3.0 2.6
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