Recent Updates
- Global Supply Chain Pressure Index (Mar, Apr)
- US: Job Openings and Labor Turnover Survey by State (Mar)
- US: New Residential Construction (Apr)
- Canada: CPI (Apr)
- Japan: NCI Economic Activity Index (May)
- more updates...
Economy in Brief
U.S. Mortgage Applications Continued to Slide Amid Higher Rates
The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack...
UK Inflation Jumps
Inflation is at the highest rate since the series began in January of 1989...
U.S. Industrial Production Much Stronger than Expected in April
The increase in manufacturing output in April was once again led by motor vehicle and parts production...
U.S. Retail Sales Posted Solid Rise in April
Notwithstanding falling real incomes and declining confidence measures, consumer spending posted a solid increase...
U.S. Home Builder Index Took a Steep Drop in May
This is the fifth straight month that builder sentiment has declined...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation & Fed Policy: A Relationship Which Should Worry The Fed And Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
"Core" GDP Suggests Economy Gained Momentum in Q1:2022
by Tom Moeller April 30, 2020
• Spending cutbacks are widespread due to the coronavirus.
• Personal income declines with the fall in employment.
• Pricing power weakens.
Personal consumption expenditures declined a record 7.5% (-3.8% y/y) during March as hiring collapsed, businesses closed and government stay-at-home guidelines were put in place. A 6.5% decline had been expected in the Action Economics Forecast Survey. In constant dollars, total spending fell 7.3% (-5.0% y/y). Real durable goods spending declined 14.8% (-11.2% y/y) during March. Spending on motor vehicles fell by roughly one-quarter both m/m and y/y, the fourth consecutive monthly decline. Home furniture & appliance buying weakened 8.3% (-4.4% y/y) and recreational goods & vehicles outlays fell 6.3% (+3.0% y/y). Real nondurable goods buying surged a record 4.3% last month (6.6% y/y). The jump came as food & beverage sales strengthened 19.1% (20.9% y/y) with the stay-at-home requirement. Apparel spending dropped 28.2% (-27.9% y/y) and has been falling since early last year. Real gasoline outlays weakened 5.3% (-4.5% y/y). Real spending on services plunged a record 9.5% (-7.5% y/y). The decline was led by a 29.7% drop (-27.7% y/y) in sales of restaurants & hotels. Transportation services outlays weakened 23.7% (-22.2% y/y) and outlays on health care fell 16.2% (-14.3% y/y). These declines were tempered by an unchanged level (+1.3% y/y) of outlays on housing & utilities.
Personal income declined 2.0% (+1.4% y/y) in March. A 1.8% decline had been expected. Wages & salaries fell 3.1% (-0.8% y/y) due to the drastic cut in employment with the outbreak of the coronavirus. Proprietors income plunged 8.2% (+0.4%% y/y) following two months of strong increase. Rental incomes rose a steady 0.4% (4.0% y/y) while receipts on assets eased 0.1% (+1.8% y/y), due to a 0.4% decline (0.0% y/y) in personal interest income. Dividend income rose 0.3% (4.2% y/y). Transfer receipts improved 1.6% (6.3% y/y), the largest gain since January of 2019.
Disposable personal weakened 2.0% (+1.4% y/y) last month, the largest decline since January 2013. Adjusted for price inflation, take-home pay fell 1.7% (+0.1% y/y) after two months of 0.4% improvement.
Last month's strength in income relative to spending caused the personal savings rate to surge to 13.1%, the highest level since October 1975. The level of personal saving rose by nearly two-thirds y/y.
The PCE chain price index decreased 0.3% in March (+1.3% y/y). The price index excluding food & energy slipped 0.1% (+1.7% y/y). Motor vehicle prices edged 0.4% lower (-0.9% y/y) and home furnishings & appliance prices also fell 0.4% both m/m and y/y. Apparel costs dropped 2.2% (-1.6% y/y). Gasoline & oil prices fell 10.4% (-10.7% y/y). Services costs held steady (2.4% y/y). Housing & utilities prices rose 0.2% (2.9% y/y) and health care prices edged 0.1% higher (2.1% y/y). Energy prices were off 6.1% (6.7% y/y), the third straight monthly decline. Food prices rose 0.6% (1.1% y/y), the strongest increase since August 2011.
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 (%) | Mar | Feb | Jan | Mar Y/Y | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Personal Income | -2.0 | 0.6 | 0.5 | 1.4 | 4.4 | 5.6 | 4.7 |
Wages & Salaries | -3.1 | 0.5 | 0.4 | -0.8 | 4.6 | 5.0 | 4.7 |
Disposable Personal Income | -2.0 | 0.5 | 0.5 | 1.4 | 4.3 | 6.1 | 4.7 |
Personal Consumption Expenditures | -7.5 | 0.2 | 0.4 | -3.8 | 4.0 | 5.2 | 4.4 |
Personal Saving Rate | 13.1 | 8.0 | 7.7 | 8.4 (Mar '19) | 7.9 | 7.7 | 7.0 |
PCE Chain Price Index | -0.3 | 0.1 | 0.2 | 1.3 | 1.4 | 2.1 | 1.8 |
Less Food & Energy | -0.1 | 0.2 | 0.2 | 1.7 | 1.6 | 2.0 | 1.6 |
Real Disposable Income | -1.7 | 0.4 | 0.4 | 0.1 | 2.9 | 4.0 | 2.9 |
Real Personal Consumption Expenditures | -7.3 | 0.1 | 0.3 | -5.0 | 2.6 | 3.0 | 2.6 |