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Economy in Brief

U.S. Personal Spending Slows as Income Picks Up in February
by Tom Moeller  March 31, 2022

• Goods spending declines but services improves.

• Core price inflation eases m/m.

• Wage & salary growth strengthens.

Personal consumption expenditures rose 0.2% (13.7% y/y) during February after strengthening 2.7% in January, revised from 2.1%. A 0.6% rise had been expected in the Action Economics Forecast Survey. Adjusted for price inflation, spending declined 0.4% last month (+6.9% y/y) after increasing 2.1% in January.

Real spending on durable goods declined 2.5% in February (+5.2% y/y) after January's 10.1% surge. The decline reflected a 4.0% drop (-2.8% y/y) in real outlays on motor vehicles & parts after surging 11.8% in January. Real furniture & appliance outlays weakened 2.8% (+0.8% y/y) after an 8.4% January rise. Real outlays on recreational goods & vehicles declined 2.3% (+14.7% y/y) following an 11.6% surge. Real nondurable goods buying fell 1.9% in February (+6.4% y/y) after a 3.1% gain. Adjusted for inflation, clothing outlays declined 2.1% (+15.6% y/y) after a 7.1% January rise. Real food & beverage expenditures fell 2.3% in February (+0.9% y/y) after a 1.9% increase, and real spending on gasoline & other energy products eased 0.1% (+11.1% y/y). Real outlays on services improved 0.6% (7.4% y/y) in February after a 0.3% increase. Housing & utilities spending fell 0.5% (+0.6% y/y) as it followed a 1.0% rise. Real outlays on recreation services offset that decline and surged 1.9% (24.4% y/y) after weakening modestly in the prior two months. Real spending at hotels & restaurants jumped 2.4% last month (24.7% y/y) after falling 1.3% in January.

Prices marched higher last month. The PCE chain price index rose 0.6% in February (6.4% y/y) following two months of 0.5% increase. The price index excluding food and energy rose 0.4%. The 5.4% y/y increase was the largest since April 1983. Durable goods prices held steady (11.4% y/y). The nondurables goods price index strengthened 1.8% (8.6% y/y) after rising 0.7% in January as gasoline & oil costs surged 6.7% (36.4% y/y) after a 0.2% dip. The services price index rose 0.3% last month (4.6% y/y) after two months of 0.4% gain.

Personal income rose an expected 0.5% (6.0% y/y) during February following a 0.1% rise, revised from no change. Wages & salaries increased 0.8% last month (11.5% y/y) after rising 0.4% in January. Proprietors income rose 0.8% (10.0% y/y) after improving 0.2%. Rental income rose 0.7% (5.6% y/y) for the second straight month. Transfer receipts declined 0.3% (-5.4% y/y) after falling 1.0% in January. Disposable income increased 0.4% (4.6% y/y) in February, after rising 0.1% in January. Adjusted for price inflation, disposable income declined 0.2% (-1.6% y/y), off for the seventh straight month.

The personal savings rate rose to 6.3% in February from 6.1% in January. It remained down from a high of 33.8% in April of 2020. The level of personal savings rose 3.5% last month but has fallen by roughly one-half during the last twelve months.

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.

Why Is U.S. Inflation Higher than in Other Countries? from the Federal Reserve Bank of San Francisco is available here.

Personal Income & Outlays (%) Feb Jan Dec Feb Y/Y 2021 2020 2019
Personal Income 0.5 0.1 0.4 6.0 7.4 6.5 4.1
  Wages & Salaries 0.8 0.4 0.7 11.5 9.4 1.3 4.8
Disposable Personal Income 0.4 0.1 0.3 4.6 6.1 7.5 3.8
Personal Consumption Expenditures 0.2 2.7 -0.9 13.7 12.1 -2.6 3.7
Personal Saving Rate 6.3 6.1 8.4 13.5 (Feb. '21) 12.3 16.6 7.6
PCE Chain Price Index 0.6 0.5 0.5 6.4 3.9 1.2 1.5
  Less Food & Energy 0.4 0.5 0.5 5.4 3.3 1.4 1.7
Real Disposable Income -0.2 -0.4 -0.2 -1.6 2.2 6.2 2.3
Real Personal Consumption Expenditures -0.4 2.1 -1.4 6.9 7.9 -3.8 2.2
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