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, near September's 0.08% 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 Rise M/M but Tread Water This Year
by Tom Moeller  November 25, 2015

Sales of new single-family homes increased 10.7% during October to 495,000 (AR) from 447,000 in September, revised from 468,000. The gain left sales up 4.9% y/y but unchanged since December. Sales of 500,000 had been expected in the Action Economics Forecast Survey. The rise contrasts to Monday's report of a 3.7% decline in existing single-family homes.

The median price of a new home plunged 8.5% from September and was down 6.0% y/y. The average sales price declined 1.0% m/m and was off 4.7% y/y.

Home sales in the Northeast more-than-doubled to 40,000 following a sharp decline in September. Sales were at the highest level since January 2010. Sales in the South also were firm, rising 8.9% to 281,000 (5.2% y/y). Sales in the Midwest gained 5.3% to 60,000 but were down 4.8% y/y. Home sales in the West eased 0.9% to 114,000 and were off 2.6% y/y.

The inventory of unsold homes increased 8.7% y/y and there was 5.5 months supply at the current sales rate. That figure is up slightly from 4.8 months at the beginning of the year. The median number of months a new home was for sale fell to a record low of 2.8. 

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

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

 

U.S. New Single-Family Home Sales (SAAR, 000s)	Oct	Sep	Aug	Y/Y %, SA	2014	2013	2012
Total	495	447	513	4.9	440	430	368
Northeast	40	17	32	60.0	28	31	29
Midwest	60	57	59	-4.8	58	61	47
South	281	258	297	5.2	244	233	195
West	114	115	125	-2.6	110	106	97
Median Price (NSA, $)	281,500	307,800	294,600	-6.0	283,775	265,092	242,108