U.S. Personal Income & Spending Remain Firm

Personal income rose 0.4% (3.4% y/y) during October following an unrevised 0.4% September increase. These gains are the largest since February and compared to a 0.3% rise expected in the Action Economics Forecast Survey. The Commerce Department indicated that the figures reflect the effects of Hurricanes Harvey & Irma, which were not quantified. Wages & salaries rose 0.3% (3.7% y/y) following a 0.5% increase, revised from 0.4%. Rental income surged 1.1% (6.0% y/y), the largest increase since April 2015. Proprietors' income improved 0.4% (3.4% y/y) following a 0.6% rise. Interest income surged 1.3% (3.8% y/y) following three straight months of 0.3% gain. Dividend income ticked 0.1% higher (2.2% y/y) following a 0.6% rise. Personal transfer receipts improved 0.2% (2.6% y/y), the same as in September. Social Security payments strengthened 0.7% (3.1% y/y), the firmest rise in nine months. Medicare payments gained a steady 0.3% (2.8% y/y). Unemployment insurance benefits declined 2.1% (-10.1% y/y), double that in each of the prior two months.

Disposable income gained 0.5% (3.2% y/y), the strongest rise since February. Adjusted for price changes, take-home pay gained 0.3% (1.6% y/y) following four consecutive months of zero increase.

Personal consumption expenditures rose 0.3% (4.2% y/y) after a 0.9% jump, revised from 1.0%. A 0.2% gain had been expected. Adjusted for price inflation, personal spending gained 0.1% (2.6% y/y) after a 0.5% increase. Real durable goods purchases eased 0.1% (5.8% y/y) after a 3.1% jump. Motor vehicle buying declined 1.0% (+3.9% y/y) after end-of-model-year promotions pumped up September's increase to 8.8%. Real spending on home furnishings & appliances improved 0.2% (7.2% y/y) after a 1.1% jump. Real spending on recreational goods & vehicles also rose 0.2% (6.8% y/y) following a 0.1% uptick. Constant dollar spending on nondurable items rose 0.5% (2.9% y/y) after a 0.1% rise. Real purchases of clothing & footwear increased 0.6% (2.1% y/y) after four straight months of lethargy. Real spending on gasoline & oil rebounded 0.6% (1.4% y/y) after a 2.7% drop. Real spending on food & beverages rose 0.4% (1.9% y/y). Real spending on services held steady (2.0% y/y) following a 0.2% rise. Real recreation spending declined 0.7% (+2.8% y/y) and took back roughly half of September's surge. Real outlays on health care rose 0.1% (2.7% y/y) after three straight months of strong increase, while housing & utilities expenditures also improved 0.1% (1.0% y/y) after a 0.2% rise.

The personal savings rate increased to 3.2% from its ten-year low of 3.0%. Personal saving declined by nearly one quarter y/y.

The PCE chain-type price index improved 0.1% (1.6% y/y) after a 0.4% jump. Excluding food & energy, prices increased 0.2% (1.4% y/y) following five straight 0.1% gains. Nondurable goods prices declined 0.3% (+1.3% y/y) with a 2.1% decline (+10.5 y/y) in gasoline prices which followed a 12.2% jump. Durable goods prices held steady (-1.9% y/y) after eight consecutive months of decline. The price index for recreational goods & vehicles eased 0.1% (-2.7% y/y) while motor vehicle costs rose 0.2% (-1.0% y/y). Services prices improved 0.3% (2.2% y/y) for a second straight month. The increase was led by a 0.8% rise (3.3% y/y) in financial services & insurance prices, and a 0.6% increase (3.2% y/y) in transportation services prices. 

The personal income & consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics figure is in the AS1REPNA database.