U.S. PCE Core Price Index Gain Eases; Personal Spending Growth Slows & Income Steadies in September

The PCE chain price index increased 0.3% in September after rising 0.3% in August. The y/y gain rose to 2.8 from 2.7% in August and was the largest gain since April 2024, up from 2.3% growth in April of this year. The PCE price index excluding food and energy prices rose 0.2% for the third straight month. The y/y rise eased to 2.8% from 2.9%.

Goods prices increased 0.5% (1.4% y/y) after a 0.1% rise but durable goods eased 0.1% (+0.9% y/y) for the third straight month. Home furnishings prices rose 0.4% (2.2% y/y) but recreational goods & vehicle prices fell 0.4% (-1.8% y/y). Nondurable goods prices strengthened 0.7% (1.7% y/y) Gasoline & other energy goods prices jumped 3.6% (-0.2% y/y), the largest increase since December of last year, while clothing prices surged 0.8% (-0.2% y/y). Prices of services increased 0.2% (3.4% y/y) after rising 0.3% for two months. Transportation services prices strengthened 1.0% (4.2% y/y) while housing & utility costs edged 0.1% higher, 4.0% y/y. Prices of services excluding energy & healthcare, increased 0.2% (3.6% y/y) in September.

Personal consumption expenditures in September improved 0.3% (5.0% y/y) after increasing 0.5% for three consecutive months. A 0.4% rise had been expected in the Action Economics Forecast Survey. After adjusting for inflation, PCE held steady, the weakest increase in four months. Real PCE growth of 2.1% y/y compared to a 3.6% rise during 2024.

Real spending on durable goods fell 0.6% (+2.1% y/y) during September as real sales of motor vehicles declined 1.1% (-0.6% y/y) after falling 1.6% in August. Home furnishings sales, adjusted for inflation, declined 0.3% (+0.3% y/y) while real sales of recreational & vehicles fell 0.5% (+6.7% y/y). Constant dollar sales of nondurable goods eased 0.3% (+2.1% y/y) in September as apparel spending fell 1.5% (+6.6% y/y). Real consumption of services gained 0.2% (2.2% y/y) for the fourth month in the last five. Spending on housing & utilities rose 0.3% (1.0% y/y) while real outlays on recreation services declined 0.4% (+1.4% y/y).

Personal income increased an expected 0.4% (5.2% y/y) in September, the same as in August. Growth of wages & salaries also was steady at 0.4% (5.0% y/y). Proprietors income eased 0.1% (+3.7% y/y) but asset earnings rose 0.6% (2.6% y/y). Disposable personal income increased 0.3% (4.8% y/y) in September following two months of 0.4% increase. Real disposable income rose 0.1% (1.9% y/y) for a second straight month. The saving rate held steady m/m at 4.7%, below the 5.7% high this past April. Personal saving rose 2.1% y/y.

The personal income and consumption figures are available in Haver’s USECON database with detail in the USNA database. The Action Economics forecasts are in AS1REPNA.