Global| Jan 31 2005Record Gain in U.S. Personal Income Fueled Spending
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income surged a record 3.7% last month due to a $24.8B boost from Microsoft's payment of a $32B stock dividend. Consensus expectations had been for a 3.3% gain. Excluding the dividend effect, personal income rose 0.6%. Income [...]
Personal income surged a record 3.7% last month due to a $24.8B boost from Microsoft's payment of a $32B stock dividend. Consensus expectations had been for a 3.3% gain. Excluding the dividend effect, personal income rose 0.6%. Income for all of last year grew 5.4%, the most since an 8.0% gain in 2000.
Wage & salary income grew 0.4% (5.1% y/y) in December and for the year logged a 4.7% increase, also the strongest since 2000 when it rose 8.1%. Factory sector wages gained 0.4% (1.6% y/y) with the year's gain pegged at 2.1% following two years of decline.
Personal disposable income gained 4.0% (8.9% y/y) and the 5.7% rise for the full year was the strongest since a 7.5% gain in 2000. Adjusted for inflation, disposable income gained 3.4% last year.
Personal consumption rose an expected 0.8% in December driven by a 12.3% m/m gain in unit sales of motor vehicles. The 6.1% rise in total PCE for the full year was just behind the next strongest year's gain of 7.3% in 2000. Spending on nondurables was unchanged in December (8.5% y/y), held back by a 7.0% decline in gasoline prices and services spending rose 0.5% (5.6% y/y).
The PCE chain price index declined by 0.1%, the second monthly decline of 2004. Less food & energy prices also dipped slightly for the first time in over a year (+1.5% y/y).
| Disposition of Personal Income | Dec | Nov | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Personal Income | 3.7% | 0.4% | 8.6% | 5.4% | 3.2% | 1.8% |
| Personal Consumption | 0.8% | 0.4% | 6.4% | 6.1% | 5.2% | 4.6% |
| Savings Rate | 3.4% | 0.3% | 1.2% | 1.0% | 1.4% | 2.0% |
| PCE Chain Price Index | -0.1% | 0.2% | 2.4% | 2.2% | 1.9% | 1.4% |
| Less food & energy | -0.0% | 0.2% | 1.5% | 1.5% | 1.3% | 1.8% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
