Global| Sep 29 2014U.S. Consumer Spending Posts Firm Rise As Income Improves
by:Tom Moeller
|in:Economy in Brief
Summary
Personal consumption expenditures increased 0.5% during August (4.1% y/y) following an unchanged July reading, revised from -0.1%. The rise matched the strongest gain since a 0.8% March increase. A 0.4% increase had been expected in [...]
Personal consumption expenditures increased 0.5% during August (4.1% y/y) following an unchanged July reading, revised from -0.1%. The rise matched the strongest gain since a 0.8% March increase. A 0.4% increase had been expected in the Action Economics Forecast Survey. When adjusted for price inflation, spending increased 0.5% (-2.6% y/y) following no change during July. Purchases of durable goods were quite strong. Real spending on motor vehicles led last month's spending with a 3.9% increase (10.2% y/y). That was accompanied by a 1.2% rise (6.1% y/y) in real consumption of home furnishings & appliances. Constant dollar spending on recreational vehicles gained 1.0% (9.2% y/y). Apparel spending rose 0.4% (2.0% y/y) in real terms and gasoline purchases improved 0.6% (0.8% y/y). Services spending rose 0.4% (1.8% y/y) in real terms as health care spending was unchanged (2.1% y/y) but recreation services jumped 2.0% (-1.1% y/y).
All this spending caused the personal saving rate to dip m/m to 5.4%, but that still was nearly the highest level since the end of 2012. The amount of personal saving declined 3.4% (+6.4% y/y) after a 3.0% July increase.
Personal income rose a modest 0.3% (4.3% y/y) following an unrevised 0.2% increase. The increase matched Consensus expectations. Wages & salaries rose 0.4% (5.1% y/y), the firmest gain in three months. Rental income jumped 1.0% (7.6% y/y) after a 0.8% rise. Proprietors' income declined 0.6% (+3.1% y/y). Earnings from dividends rose 0.3% (2.7% y/y) but interest income slipped 0.2% (+0.9% y/y) for the second straight month. Transfer payments improved 0.7% (5.2% y/y) following a 0.4% rise. The gain was led by a 2.0% jump (12.5% y/y) in Medicaid payments. Social security receipts increased 0.5% (4.3% y/y) but unemployment insurance benefits were unchanged (-35.7% y/y). Disposable personal income gained 0.3% (4.2% y/y) after a 0.2% improvement. In real terms, disposable income moved 0.3% higher (2.7% y/y), improving on a 0.1% uptick.
The chain price index was virtually unchanged in August (1.5% y/y) after a 0.1% uptick. Energy prices declined 2.7% (0.0% y/y) but food prices gained 0.3% (2.2% y/y) for a second straight month. Durable goods prices declined 0.2% (-2.2% y/y) while nondurable prices moved 0.6% lower (+0.8% y/y). Services prices increased 0.2% (2.3% y/y). Prices excluding food & energy edged 0.1% higher (1.5% y/y) for a second month.
The personal income & consumption figures are available in Haver's USECON and USNA databases. The consensus expectation figure is in the AS1REPNA database.
| Personal Income & Outlays (%) | Aug | Jul | Jun | Y/Y | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Personal Income | 0.3 | 0.2 | 0.5 | 4.3 | 2.2 | 5.2 | 6.2 |
| Wages & Salaries | 0.4 | 0.2 | 0.3 | 5.1 | 2.8 | 4.5 | 4.0 |
| Disposable Personal Income | 0.3 | 0.2 | 0.5 | 4.2 | 1.0 | 4.9 | 5.0 |
| Personal Consumption Expenditures | 0.5 | 0.0 | 0.5 | 4.1 | 3.6 | 3.7 | 4.8 |
| Personal Saving Rate | 5.4 | 5.6 | 5.4 | 5.3 (Aug '13) |
4.9 | 7.2 | 6.0 |
| PCE Chain Price Index | -0.0 | 0.1 | 0.2 | 1.5 | 1.2 | 1.8 | 2.5 |
| Less Food & Energy | 0.1 | 0.1 | 0.2 | 1.5 | 1.3 | 1.8 | 1.5 |
| Real Disposable Income | 0.3 | 0.1 | 0.3 | 2.7 | -0.2 | 3.0 | 2.5 |
| Real Personal Consumption Expenditures | 0.5 | -0.1 | 0.3 | 2.6 | 2.4 | 1.8 | 2.3 |
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.
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