Global| May 27 2011U.S. Spending & Income Gains Eroded By Higher Prices
by:Tom Moeller
|in:Economy in Brief
Summary
Individuals continue to do their part in supporting the economic recovery. It's just that higher prices are eroding the effort.Personal consumption expenditures gained 0.4% last month, after a 0.5% March rise, but that increase was [...]
Individuals continue to do their part in supporting
the economic recovery. It's just that higher prices are eroding the
effort.Personal consumption expenditures
gained 0.4% last month, after a 0.5% March rise, but that increase was
revised lower from 0.6%. A 0.5% April increase had been expected. Spending
on goods rose 0.7% (8.4% y/y) paced by a 3.0% jump (27.9% y/y) in gasoline
& energy. In constant dollars, spending on goods was unchanged (4.2%
y/y) while real spending on gasoline slipped 0.2% (-3.7% y/y). Durables
spending rose 0.3% (8.1% y/y) as auto purchases jumped 1.5% (15.6% y/y).
In constant dollars, personal consumption rose 0.1% last month (2.6% y/y),
the same as during March.
Personal income rose 0.4% during April following a 0.4% March increase, initially reported as 0.5%. A 0.4% gain had been expected. In constant dollars, spending rose 0.1% for the second month. Disposable personal income gained 0.3%; however, when adjusted for higher prices, income slipped after no-change in March.
Growth in wages & salaries remained moderate at 0.4% (3.3% y/y) and the y/y gains look to have peaked despite the improved job market. Rental income continued strong and rose 0.9% (12.9% y/y) while proprietors' income grew 0.4% (5.6% y/y). Economic improvement raised April dividend income by 0.6% (5.4% y/y) while interest income ticked up again by just 0.1% (0.4% y/y) for the fourth consecutive month. The personal savings rate held at 4.9% while earlier figures were revised lower.
The PCE chain price index increased 0.3% last month (2.2% y/y). Higher gasoline prices again accounted for most of the strength with a 3.2% jump (33.6% y/y). Food prices also gained 0.4% (3.2% y/y). The core PCE price deflator rose 0.2% and 1.0% y/y versus the record low year-to-year gain of 0.7% reached in December.
The personal income & consumption figures are available in Haver's USECON and USNA databases. The expectations figures are in the AS1REPNA database.
| Personal Income & Outlays (%) | Apr | Mar | Feb | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Personal Income | 0.4 | 0.4 | 0.4 | 4.4 | 3.0 | -1.7 | 4.0 |
| Wages & Salaries | 0.4 | 0.3 | 0.4 | 3.3 | 2.0 | -4.3 | 2.1 |
| Disposable Personal Income | 0.3 | 0.4 | 0.3 | 3.3 | 3.1 | 0.7 | 5.1 |
| Personal Consumption Expenditures | 0.4 | 0.5 | 0.8 | 4.8 | 3.5 | -1.0 | 3.0 |
| Saving Rate | 4.9 | 4.9 | 5.0 | 6.0 (Apr.'10) | 5.8 | 5.9 | 4.1 |
| PCE Chain Price Index | 0.3 | 0.4 | 0.4 | 2.2 | 1.7 | 0.2 | 3.3 |
| Less Food & Energy | 0.2 | 0.1 | 0.2 | 1.0 | 1.3 | 1.5 | 2.3 |
| Real Disposable Income | -0.0 | 0.0 | -0.1 | 1.1 | 1.4 | 0.6 | 1.7 |
| Real Personal Consumption Expenditures | 0.1 | 0.1 | 0.4 | 2.6 | 1.7 | -1.2 | -0.3 |
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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