Global| Jun 27 2011U.S. Income Gain Is Moderate & Spending Is Flat
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income rose 0.3% last month following a 0.3% increase during April, initially reported as 0.4%. A 0.4% gain had been expected. Disposable income gained 0.2%, the same as in April. Adjusted for prices, however, growth was [...]
Personal income rose 0.3% last month following a 0.3% increase
during April, initially reported as 0.4%. A 0.4% gain had been
expected. Disposable income gained 0.2%, the same as in April. Adjusted
for prices, however, growth was weaker. Constant dollar take-home pay rose
0.1% and made up for April's 0.1% downtick. These latest changes pulled
y/y growth in real income down to 0.6%.
Growth in wages & salaries was modest at 0.2%, reflecting last month's negligible increase in payroll employment. Rental income remained strong and rose 1.0% (13.6% y/y), while proprietors' income fell 0.2% (+5.0% y/y). Transfer payments rose 0.4% but the y/y increase eased to 3.4% with the improved job market. Economic improvement also raised May dividend income by 0.6% (4.8% y/y). Higher interest rates raised interest income by 0.5% (1.9% y/y). The personal savings rate ticked up to 5.0%.
Personal consumption expenditures were unchanged last month after a 0.3% April rise, but that increase was revised lower from 0.4%. A 0.1% May uptick had been expected. Spending on goods fell 0.7% (+8.5% y/y) while auto sales fell for the third straight month (+7.4% y/y). Spending on gasoline & energy also fell 2.4% (+29.3%) with the slip in prices. Apparel spending rose 0.3% (+4.8% y/y) and made up April's decline. Services spending rose 0.4% (2.8% y/y). In constant dollars, real personal consumption expenditures slipped 0.1% (+2.1% y/y), the same as in April.
The PCE chain price index rose 0.2% last month (2.5% y/y). A 2.1% decline (+36.7% y/y) in gasoline prices held back the increase, but it was countered by a 1.3% jump (1.0% y/y) in apparel prices. Home furnishings prices rose 0.3% (-2.3% y/y) and food prices gained 0.3% (3.5% y/y). The core PCE price deflator rose 0.3% and 1.2% y/y versus the record low year-to-year gain of 0.7% reached in December.
The personal income & consumption figures are available in Haver's USECON and USNA databases. The expectations figures are in the AS1REPNA database.
| Personal Income & Outlays (%) | May | Apr | Mar | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Personal Income | 0.3 | 0.3 | 0.4 | 4.2 | 3.0 | -1.7 | 4.0 |
| Wages & Salaries | 0.2 | 0.4 | 0.3 | 2.8 | 2.0 | -4.3 | 2.1 |
| Disposable Personal Income | 0.2 | 0.2 | 0.4 | 3.1 | 3.1 | 0.7 | 5.1 |
| Personal Consumption Expenditures | 0.0 | 0.3 | 0.6 | 4.7 | 3.5 | -1.0 | 3.0 |
| Saving Rate | 5.0 | 4.9 | 4.9 | 6.2 (May'10) |
5.8 | 5.9 | 4.1 |
| PCE Chain Price Index | 0.2 | 0.3 | 0.4 | 2.5 | 1.7 | 0.2 | 3.3 |
| Less Food & Energy | 0.2 | 0.2 | 0.2 | 1.2 | 1.3 | 1.5 | 2.3 |
| Real Disposable Income | 0.1 | -0.1 | 0.0 | 0.6 | 1.4 | 0.6 | 1.7 |
| Real Personal Consumption Expenditures | -0.1 | -0.1 | 0.2 | 2.1 | 1.7 | -1.2 | -0.3 |
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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