U.S. Personal Spending Inches Higher as Income Strengthens

Consumers are exhibiting cautious spending behavior despite firm income gains. Personal consumption expenditures improved 0.12% (2.9% y/y) in October, the same as September's rise which was unrevised. These were the smallest gains since January and missed expectations for a 0.3% rise in the Action Economics Forecast Survey. Adjusted for inflation, spending inched 0.06% higher (2.7% y/y). A 0.7% decline (+3.4% y/y) in real motor vehicle purchases held back the overall rise, though it followed three months of increase. Constant dollar buying of recreational goods & vehicles made up that weakness with a 0.9% rise (8.4% y/y) after a 0.8% increase. Home furnishings & appliance purchases increased 0.6% (6.2% y/y) in constant dollars following a 0.1% dip. In the nondurable goods sector, real apparel purchases surged 0.8% (4.3% y/y) after a 0.5% rise. Real gasoline purchases fell 0.3% (+2.0% y/y) after a 1.5% decline and the constant dollar value of eating out dropped 0.8% (-0.3% y/y), down for the third month in the last four. Real spending on services was unchanged (2.2% y/y) after a 0.2% increase. Real spending on recreation services rose 0.5% (0.3% y/y) after a 1.0% jump but constant dollar housing & utilities outlays fell 0.8% (+0.8% y/y). Health care spending advanced 0.4% (4.1% y/y) in real terms, the same as the prior month. 

Personal income improved 0.4% (4.6% y/y) for the third time in four months. The increase matched expectations and reflected a 0.6% gain (4.9% y/y) in wage & salary income after having been unchanged in September. Rental income jumped 0.8% (7.2% y/y), the strongest increase in four months. Proprietors earnings rose 0.3% (2.8% y/y) after a 0.4% rise. Dividend earnings jumped 0.9% (5.5% y/y), the strongest rise in three months, but interest earnings fell 0.2% (+3.4% y/y) following three straight 0.1% upticks. Transfer receipts improved 0.3% (4.9% y/y), the same in the prior month. The gain was held back by a 2.8% decline (+1.0% y/y) in unemployment insurance benefits but Medicaid income rose 0.7% (7.6% y/y). Veterans benefits also rose 0.7% (12.1% y/y) and Medicare payments improved 0.5% (4.0% y/y). 

Disposable personal income jumped 0.4% and gains have been fairly steady for the last six months. The 4.1% y/y rise matched growth during all of last year. Adjusted for price inflation, take-home pay rose 3.9% y/y, up from the 2.7% increase last year.

The personal savings rate improved to 5.6% from 5.3%, revised from 4.8%. The rate was the highest since 2012. Personal saving increased 30.7% during the last twelve months.

The chain price index improved 0.1% (0.2% y/y) following two months of slight decline. The index change was held back by a 0.2% dip (2.0% y/y) in durable goods prices but food prices improved 0.2% (0.8% y/y) for the fourth straight month. Nondurable goods prices eased slightly (-3.7% y/y) while energy prices gained 0.2% (-18.4% y/y). Services prices improved 0.1% (1.9% y/y) after two months of 0.2% rise. The price index excluding food & energy remained unchanged (1.3% y/y) after a 0.2% rise.

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.

Global Fallout from China's Industrial Slowdown from the Federal Reserve Bank of San Francisco is available here http://www.frbsf.org/economic-research/publications/economic-letter/2015/november/global-fallout-from-china-industrial-slowdown/?utm_source=frbsf-home-economic-letter-title&utm_medium=frbsf&utm_campaign=economic-letter

Personal Income & Outlays (%)	Oct	Sep	Aug	Y/Y	2014	2013	2012
Personal Income	0.4	0.2	0.4	4.6	4.4	1.1	5.0
Wages & Salaries	0.6	0.0	0.4	4.9	5.1	2.7	4.5
Disposable Personal Income	0.4	0.2	0.4	4.1	4.2	-0.1	5.1
Personal Consumption Expenditures	0.1	0.1	0.3	2.9	4.2	3.1	3.4
Personal Saving Rate	5.6	5.3	5.2	4.5 (Oct. '14)	4.8	4.8	7.6
PCE Chain Price Index	0.1	-0.1	-0.0	0.2	1.4	1.4	1.9
Less Food & Energy	0.0	0.2	0.1	1.3	1.5	1.5	1.9
Real Disposable Income	0.4	0.3	0.4	3.9	2.7	-1.4	3.1
Real Personal Consumption Expenditures	0.1	0.1	0.3	2.7	2.7	1.7	1.5

 

 

U.S. New Home Sales Weaken but Prices Rebound
by Tom Moeller  November 25, 2015

Recent housing market data are throwing off mixed signals. On the heels of Thursday's report that existing home sales in September neared a nine-year high, today's indication that new single-family home sales fell 11.5% last month to 468,000 (AR) left them up 2.0% y/y as the prior two months were revised lower. Sales were at the lowest level since November. Expectations had been for 547,000 sales in the Action Economics Forecast Survey.

The median price of a new single-family rose 2.7% (13.5% y/y) to $296,000. The reversal of an August decline left them at this year's highest level and one-third firmer than the 2010 average. The average price of a new single-family home jumped 6.2% (14.1% y/y) to $364,000, the highest level since December.

Home sales were notably weak last month in the Northeast as they fell 61.8% to 13,000 (-56.7% y/y). Sales in other regions of the country also declined but to lesser degrees. In the South, sales were off 8.7% to 274,000 but rose 8.3% y/y. Sales in the Midwest fell 8.3% both m/m and y/y to 55,000 and sales in the West declined 6.7% to 126,000 (+8.6% y/y).

The easing of home sales prompted a rise in the supply of homes on the market to 5.8 months at the current sales rate, the highest level since July of last year. Working the other way, however, the median number of months a home was on the market declined to 3.3, the least since February.

Five Questions Related to U.S. Monetary Policy is the title of St. Louis Fed President & CEO James Bullard's speech and it can be found here  https://www.stlouisfed.org/news-releases/2015/11/20/st-louis-feds-bullard-discusses-five-questions-related-to-us-monetary-policy

The data in this report are available in Haver's USECON database. The consensus expectation figure from the Action Economics survey is available in the AS1REPNA database.

U.S. New Single-Family Home Sales (SAAR, 000s)	Oct	Sep	Aug	Oct Y/Y %	2014	2013	2012
Total		468	529	2.0	440	430	368
Northeast		13	34	-56.7	28	31	29
Midwest		55	60	-8.3	58	61	47
South		274	300	8.3	244	233	195
West		126	135	8.6	110	106	97
Median Price (NSA, $)		296,900	289,100	13.5	283,775	265,092	242,108