Global| Jan 31 2011U.S. Personal Income & Spending Improve During 2010
by:Tom Moeller
|in:Economy in Brief
Summary
Personal income turned the corner last year into positive territory. For the full year, the pickup in income growth to 3.0% from -1.7% reflected positive growth in hourly earnings, a lessened decline in employment and growth in [...]
Personal income turned the corner last year into positive territory.
For the full year, the pickup in income growth to 3.0% from -1.7% reflected
positive growth in hourly earnings, a lessened decline in employment and growth
in proprietors' income. Last month, income grew an expected 0.4% following an unrevised
0.4% November rise. Private sector wage income grew 0.3%. For the full year,
wages grew 2.3% but December-to-December there was a quicker acceleration to
4.1%. Still reflecting job cutbacks, modest growth in government sector wages of
1.2% for the year was the lowest since the series began in 1960. Disposable
personal income rose 0.4% last month. It was up a moderate 3.1% for the full
year, accelerated from 0.7% in 2009.
Proprietors' income grew 0.7% last month, the same as in November. It rose 4.3% for the full year, reversing the 8.2% decline in 2007. Economic improvement also raised dividend income by 1.1% last month, and 2.2% for 2010 following the 12.2% drop in 2009. Higher interest rates boosted December interest income by 1.1% after a like gain during the prior two months. Nevertheless, interest income fell 2.3% for the year after a 7.0% decline during 2009.
More income generated more spending in 2010. Personal consumption expenditures rose 0.7% last month, up from a 0.3% November gain, initially reported as 0.4%. A 0.5% December increase had been expected. For the year, spending grew 3.5% following a 1.0% 2009 decline. Spending on goods rose 0.7%, 6.1% for the full year, as gasoline expenditures surged 18.0% in 2010 with higher prices. Constant dollar gasoline expenditures fell 0.2% for the whole year. Spending on apparel (4.9% y/y) and furniture (4.2% y/y) both improved along with spending on motor vehicles (8.0%). Spending on services rose a modest 2.3% y/y.
The personal savings rate slipped to 5.3% from an upwardly revised 5.5% in November. The latest rates remained down from 5.8% for all of last year which was constant with 2009. However, these rates remained up from the monthly low of 1.8% late in 2007.
Price inflation remained modest. The PCE chain price index rose 0.3% last month after a 0.1% November rise. For all of the year, prices rose an accelerated 1.2% Dec/Dec but 1.7% for the whole year with higher energy costs. Food prices rose just 0.4% for the year, down from a 1.3% increase in 2009. The core PCE price deflator was unchanged last month versus an expected 0.1% uptick. The 1.3% increase for the year was a record low.
The personal income & consumption figures are available in Haver's USECON and USNA databases.
Yield Curve and Predicted GDP Growth from the Federal Reserve Bank of Cleveland can be found here.
| Personal Income & Outlays (%) | Dec. | Nov. | Oct. | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Personal Income | 0.4 | 0.3 | 0.4 | 3.8 | 3.0 | -1.7 | 4.0 |
| Wages & Salaries | 0.3 | 0.1 | 0.6 | 3.5 | 2.1 | -4.3 | 2.1 |
| Disposable Personal Income | 0.4 | 0.3 | 0.4 | 3.4 | 3.1 | 0.7 | 5.1 |
| Personal Consumption Expenditures | 0.7 | 0.3 | 0.7 | 4.1 | 3.5 | -1.0 | 3.0 |
| Saving Rate | 5.3 | 5.5 | 5.5 | 5.8 (Dec.'09) |
5.8 | 5.9 | 4.1 |
| PCE Chain Price Index | 0.3 | 0.1 | 0.2 | 1.2 | 1.7 | 0.2 | 3.3 |
| Less Food & Energy | 0.0 | 0.1 | 0.0 | 0.7 | 1.3 | 1.5 | 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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