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Economy in Brief

U.S. Personal Spending Decelerates Despite Strong Income Gain
by Tom Moeller  February 28, 2020

Personal consumption expenditures rose 0.2% (4.5% y/y) during January following a 0.4% December gain, revised from 0.3%. A 0.3% January gain had been expected in the Action Economics Forecast Survey. In constant dollars, spending edged 0.1% higher (2.7% y/y) for a second consecutive month. Real durable goods spending increased 0.5% (7.3% y/y) during January after a 0.1% rise. Spending on motor vehicles rebounded 1.5% (9.3% y/y) after a 0.2% dip. Recreational goods & vehicles outlays rose 0.9% (10.3% y/y) following an easing of 0.3%. Spending on furniture & household equipment slipped 0.1% (+3.3% y/y) for a second straight month. Real nondurable goods buying weakened 0.2% last month (+2.1% y/y) after a 0.1% improvement. Apparel spending dropped 2.2% (+2.1% y/y) after a 0.7% rise. Real gasoline outlays held roughly steady (-2.2% y/y) following two months of decline. Real spending on services improved 0.1% (2.3% y/y) for a second straight month. The rise was held back by a 0.3% fall (+0.7% y/y) in spending on housing & utilities, off for the third month in the last four. Health care spending held steady (2.9% y/y) after rising 0.3% while spending at restaurants & hotels increased 0.5% (3.7% y/y) after a 1.1% jump.

Personal income strengthened 0.6% (4.0% y/y) after a 0.1% December gain, revised from 0.2%. A 0.3% rise was expected. Wages & salaries improved 0.5% (3.7% y/y) after edging 0.1% higher. Proprietors income rose 0.6% (4.5% y/y) following a 1.4% decline. Rental incomes rose 0.5% (4.4% y/y) after two straight 0.6% increases, and receipts on assets gained 0.4% (2.9% y/y) due to a 1.1% rise (4.1% y/y) in personal dividend income. Transfer receipts strengthened 1.6% (5.6% y/y) after holding steady in December.

Disposable personal income rose 0.6% (4.0% y/y) last month after edging 0.1% higher, revised from 0.2%. Adjusted for price inflation, take-home pay strengthened 0.5% (2.2% y/y) after slipping 0.1% in December.

Last month's strength in income relative to the gain in spending caused the personal savings rate to rise to 7.9% in January and recouped the prior month's decline. The level of personal saving declined 0.2% y/y last month.

The PCE chain price index increased 0.1% (1.7% y/y) after a 0.3% strengthening. The price index excluding food & energy also inched up 0.1% (1.6% y/y) after a 0.2% rise. Energy prices fell 0.7% (+5.6% y/y) after a 1.7% gain. Food prices rose 0.3% (0.8% y/y) after dipping 0.1%.

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 AS1REP NA database

Personal Income & Outlays (%) Jan Dec Nov Jan Y/Y 2019 2018 2017
Personal Income 0.6 0.1 0.5 4.0 4.4 5.6 4.7
  Wages & Salaries 0.5 0.1 0.4 3.7 4.6 5.0 4.7
Disposable Personal Income 0.6 0.1 0.4 4.0 4.3 6.1 4.7
Personal Consumption Expenditures 0.2 0.4 0.3 4.5 4.0 5.2 4.4
Personal Saving Rate 7.9 7.5 7.8 8.3 (Jan '19) 7.9 7.7 7.0
PCE Chain Price Index 0.1 0.3 0.1 1.7 1.4 2.1 1.8
  Less Food & Energy 0.1 0.2 0.1 1.6 1.6 2.0 1.6
Real Disposable Income 0.5 -0.1 0.3 2.2 2.9 4.0 2.9
Real Personal Consumption Expenditures 0.1 0.1 0.2 2.7 2.6 3.0 2.6
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