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Economy in Brief
U.S. Wholesale Inventories Post Strong February Gain; Sales Fall
Wholesale inventories increased 0.6% (2.0% y/y) during February...
U.S. Initial Unemployment Insurance Claims Unexpectedly Increase
Initial claims for unemployment insurance rose to 744,000 during the week ended April 3...
Total PMIs Gain Traction in March
The PMI readings for March show improvement again...
U.S. Consumer Credit Outstanding Bounces Back in February
Consumer credit outstanding surged $27.6 billion during February...
U.S. Trade Deficit Widens to Record during February
The U.S. trade deficit in goods and services widened to $71.1 during February...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller March 26, 2021
• Total income falls but wage income holds steady.
• Spending weakens across categories.
• Pricing power moderates.
Personal income weakened 7.1% (+4.3% y/y) during February following a little-revised 10.1% January jump. A 7.0% decline had been expected in the Action Economics Forecast Survey. Transfer payments declined 27.4% following the 52.2% January surge due to government stimulus checks. Wages & salaries held steady both m/m and y/y after rising firmly in each month since May. Proprietors' income jumped 2.3% (-4.8% y/y) after easing 0.1% in January. Rental income strengthened 1.3% (2.5% y/y) for a second consecutive month. Earnings on assets rose 0.5% (-3.1% y/y) as dividend income rose 0.7% (-4.0% y/y) and interest income improved 0.4% (-2.4% y/y). Disposable personal income declined 8.0% (+5.0% y/y) last month after improving 11.4% in January. Adjusted for price inflation, real disposable income fell 8.2% (+3.4% y/y) after strengthening 11.1% in January.
Snow and ice storms weighed on consumer spending last month. Personal consumption expenditures weakened 1.0% (-0.6% y/y) following a 3.4% January rise, revised from 2.4%. A 0.7% decline had been expected. Adjusted for price inflation, spending decreased 1.2% (-2.1% y/y) after rising 3.0%. The decline in spending reflected a 4.6% drop (+16.1% y/y) in outlays on durable goods, led by a 5.8% (+22.1% y/y) decline in spending on recreational goods & vehicles. Spending on furniture & appliances declined 5.1% (+13.3% y/y) while motor vehicle sales fell 4.2% (+14.1% y/y). Nondurable goods purchases declined 2.5% (+5.3% y/y). Clothing spending weakened 4.9% (+1.7% y/y). Food & beverage sales fell 1.7% (+10.0% y/y) after rising 5.9% while spending on gasoline edged 0.5% higher (-10.2% y/y). Real outlays on services eased 0.1% (-7.0% y/y) as restaurant & hotel spending fell 1.3% (+20.1% y/y) after a 6.9% January surge. Recreation services outlays rose 0.2% (-30.9% y/y) while transportation service outlays declined 1.4% (-25.5% y/y). Health care outlays eased 0.2% (-5.2% y/y) but housing & utilities spending improved 0.4% (1.5% y/y).
The personal savings rate fell to 13.6% in February from 19.8% in January. The rate reached a record high 33.7% in April. The level of personal saving rose by more than one-third in February (+73.5% y/y).
The PCE chain price index increased 0.2% (1.6% y/y) last month following a 0.3% January rise. The price index excluding food and energy edged 0.1% higher (1.4% y/y) after a 0.2% gain, revised from 0.3%. Energy prices jumped 3.8% (1.2% y/y), strong for the third straight month. Food & beverage prices rose 0.2% (3.3% y/y) after easing 0.1% in January.
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 (%) | Feb | Jan | Dec | Feb Y/Y | 2020 | 2019 | 2018 |
---|---|---|---|---|---|---|---|
Personal Income | -7.1 | 10.1 | 0.5 | 4.3 | 6.1 | 3.9 | 5.3 |
Wages & Salaries | -0.0 | 0.7 | 0.5 | -0.0 | 0.2 | 4.7 | 5.0 |
Disposable Personal Income | -8.0 | 11.4 | 0.6 | 5.0 | 7.0 | 3.7 | 5.8 |
Personal Consumption Expenditures | -1.0 | 3.4 | -0.6 | -0.6 | -2.7 | 3.9 | 4.9 |
Personal Saving Rate | 13.6 | 19.8 | 13.5 | 8.3 (Feb '20) | 16.3 | 7.5 | 7.8 |
PCE Chain Price Index | 0.2 | 0.3 | 0.4 | 1.6 | 1.2 | 1.5 | 2.1 |
Less Food & Energy | 0.1 | 0.2 | 0.3 | 1.4 | 1.4 | 1.7 | 2.0 |
Real Disposable Income | -8.2 | 11.1 | 0.2 | 3.4 | 5.8 | 2.2 | 3.6 |
Real Personal Consumption Expenditures | -1.2 | 3.0 | -0.9 | -2.1 | -3.9 | 2.4 | 2.7 |