U.S. Personal Spending & Income Inch Higher; Prices Ease

Personal consumption expenditures edged 0.1% higher (3.4% y/y) during September following an unrevised 0.4% August increase. It was the smallest gain since January and missed expectations for a 0.2% rise in the Action Economics Forecast Survey. Adjusted for a dip in prices, spending gained 0.2% (3.2% y/y). Real motor vehicle purchases jumped 1.5% (6.2% y/y), the third consecutive month of strength. Clothing purchases increased 0.8% (4.2% y/y) in real terms following a 0.2% dip. Constant dollar buying of recreational goods & vehicles ticked 0.1% higher (7.2% y/y) after a 0.5% rise. Real gasoline purchases fell 1.1% (+4.9% y/y) and the constant dollar value of eating out dropped 0.6% (-0.1% y/y). Real spending on services rose 0.3% (2.8% y/y) after a 0.4% increase. Real spending on recreation services rose 0.8% (1.4% y/y) after declining 0.5%. Health care spending advanced 0.4% (4.6% y/y) in real terms following a 0.3% increase but real housing & utility spending gained just 0.1% (1.3% y/y) following a 0.9% rise.

Personal income improved 0.1% (4.1% y/y) on the heels of five consecutive 0.4% increases. A 0.2% rise had been expected. Wage & salary income was little changed (3.7% y/y) after two straight months of 0.5% gain. Rental income rose a moderate 0.4% (7.1% y/y) following a 0.3% rise. These gains compare to three monthly increases during Q2 of roughly 1.0%. Proprietors earnings also rose 0.4% (3.7% y/y) after no change. Dividend earnings jumped 0.5% (5.0% y/y) for a second straight month but interest earnings notched 0.1% higher (3.9% y/y) for the third consecutive period. Transfer receipts improved 0.1% (4.4% y/y) following a two straight 0.4% increases. The gain was held back by a 2.4% decline (-10.4% y/y) in unemployment insurance benefits as well as a 0.1% dip (+4.3% y/y) in social security payments. Medicare income rose 0.4% (3.8% y/y) for the third straight month.

Disposable personal income improved 0.1% following five straight months of roughly 0.4% increase. The 3.6% y/y gain remained the strongest since February. Adjusted for price inflation, take-home pay rose 3.4% y/y.

The personal savings rate improved to 4.8% from 4.7%, revised from 4.6%. The rate was below a February high of 5.4%. Personal saving increased 8.4% during the last twelve months.

The chain price index eased slightly (+0.2% y/y) for the second straight month. The index change was held back by a 4.9% decline (-19.6% y/y) in energy prices while food prices improved 0.2% (0.7% y/y) for the third straight month. Durable goods prices increased 0.2% (-1.8% y/y), the first increase since April, while nondurable goods prices declined 0.9% (-3.9% y/y). Services prices improved 0.1% (1.8% y/y) for the third straight month. The price index excluding food & energy notched 0.1% higher (1.3% y/y) for the fifth straight month.

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.

Personal Experiences and Expectations about Aggregate Outcomes from the Federal Reserve Bank of New York can be found here.