Global| Mar 29 2013U.S. Personal Income & Spending Are Firm
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income jumped 1.1% last month (2.6% y/y) after a little-revised 3.7% January decline. The rise easily outpaced consensus expectations for a 0.7% increase. Last month's outsized gain in overall income stemmed from a 2.0% rise [...]
Improvement in income is encouraging consumers to keep
spending. Personal income jumped 1.1% last month
(2.6% y/y) after a little-revised 3.7% January decline. The rise easily
outpaced consensus expectations for a 0.7% increase. Last month's
outsized gain in overall income stemmed from a 2.0% rise (12.7% y/y) in
rental incomes (12.7% y/y). Proprietors income also was solid and
increased 1.0% (5.5% y/y). Wage & salaries grew 0.6% (2.7% y/y) following a
0.6% January decline. These gains were partially offset by a 1.2% drop
(+0.1% y/y) in interest earnings.
With the solid gain in income, consumers increased spending by an
expected 0.7% (3.3% y/y). This followed an upwardly revised 0.4%
January rise. The jump in gasoline prices last month prompted an 8.1%
surge (4.1% y/y) in outlays on fuel. However, consumers pulled back on
the number of gallons bought and real outlays on gasoline slipped 0.4%
(+1.0% y/y). Outlays on food & beverages also jumped 1.1% (2.1% y/y)
and the strength of the m/m increase reflected real consumption's jump.
In the discretionary spending categories, motor vehicle outlays slipped
0.2% (+7.9% y/y) while furniture and appliance spending gained 0.2%
(2.7% y/y). Clothing spending rose 0.4% (2.5% y/y) and spending on
services gained 0.4% (3.1% y/y). The strength in income growth relative to the monthly rise in
spending raised the personal savings rate to 2.6% from 2.2%. These
figures remained, however, well below the 4.0%-to-5.5% averages of the
prior four years. The PCE chain price index gained 0.4% (1.3% y/y) following no
change during the prior two months. An 8.5% rise (3.1% y/y) in the chain
price index for gasoline & energy provided the strength behind
pricing power in February. Elsewhere, durable
goods prices slipped 0.1% (-1.7% y/y) as all categories showed price
declines. In the nondurables area, apparel prices slipped 0.1% (+3.0%
y/y) but food prices gained 0.2% (1.2% y/y). Services prices inched up
0.1% (1.8% y/y). Excluding food & energy, the price index gained
0.1% (1.3% y/y).
Adjusted for price changes, disposable income during February
rose 0.7% (0.9% y/y) and real spending gained 0.3% (2.0% y/y). 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 (%)
Feb
Jan
Dec
Y/Y
2012
2011
2010
Personal Income
1.1
-3.7
2.6
2.6
3.5
5.1
3.8
Wages & Salaries
0.6
-0.6
0.7
2.7
3.3
4.0
2.1
Disposable Personal Income
1.1
-4.0
2.7
2.3
3.3
3.8
3.8
Personal Consumption Expenditures
0.7
0.4
0.2
3.3
3.7
5.0
3.8
Personal Saving Rate
2.6
2.2
6.5
3.5
(Feb'12)3.9
14.2
5.1
PCE Chain Price Index
0.4
0.0
0.0
1.3
1.7
2.4
1.9
Less Food &
Energy
0.1
0.2
0.0
1.3
1.7
1.4
1.5
Real Disposable Income
0.7
-4.0
2.7
0.9
1.5
1.3
1.8
Real Personal Consumption
Expenditures
0.3
0.3
0.2
2.0
1.9
2.5
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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