Global| Apr 29 2005U.S. Income & Spending Above Expectations
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income in March topped Consensus expectations and rose 0.5% following an upwardly revised 0.4% increase in February. Disposable personal income also rose 0.5% (5.8% y/y) although when adjusted for price inflation take home [...]
Personal income in March topped Consensus expectations and rose 0.5% following an upwardly revised 0.4% increase in February. Disposable personal income also rose 0.5% (5.8% y/y) although when adjusted for price inflation take home pay was unchanged m/m (3.3% y/y).
Wage & salary income rose 0.3% (5.8% y/y) following an upwardly revised like gain in February. Wages in service producing industries rose 0.4% (6.4% y/y) however factory sector wages fell 0.2% (5.8% y/y), the first decline in four months.
Personal consumption increased 0.6% and beat expectations for a 0.4% gain while February's increase was revised up. Durable goods spending jumped 2.2% (5.2% y/y) as spending on motor vehicles advanced 6.2% (7.5% y/y).
Nondurables spending fell slightly even though spending on gasoline & oil rose 6.4% (16.7% y/y), all a function of a 7.6% (20.2% y/y) rise prices. Spending on clothing fell 2.3% (+1.9% y/y). Services spending rose 0.6% (6.1% y/y) as the cost of household operation, including utilities, rose 1.7% (10.3% y/y).
The personal savings rate fell to 0.4%. The low number compares to the net worth of the household sector (from the flow of funds accounts) which has been rising. Total net worth was 5.5 times disposable income in 4Q04, up 10% versus the lows of two years earlier. The gain was powered by a 23.5% rise in the owners equity in real estate over those two years.
The PCE chain price index rose 0.5% and less food & energy, the 0.3% m/m increase pulled the y/y gain back to its highest level since early 2003.
| Disposition of Personal Income | Mar | Feb | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Personal Income | 0.5% | 0.4% | 6.0% | 5.6% | 3.2% | 1.8% |
| Personal Consumption | 0.6% | 0.7% | 6.1% | 6.0% | 5.2% | 4.6% |
| Savings Rate | 0.4% | 0.5% | 1.0% | 1.2% | 1.4% | 2.0% |
| PCE Chain Price Index | 0.5% | 0.3% | 2.4% | 2.2% | 1.9% | 1.4% |
| Less food & energy | 0.3% | 0.2% | 1.7% | 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.
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