U.S. Personal Spending & Income Firm in October

Personal consumption expenditures increased 0.8% (7.9% y/y) during October after rising an unrevised 0.6% in September. The gain matched expectations in the Action Economics Forecast Survey. The 0.5% rise (1.8% y/y) in real sending was the strongest increase in nine months, up from 0.3% in September. Real spending on durable goods surged 2.7% (2.0% y/y) last month as spending on motor vehicle & parts jumped 5.8% (1.1% y/y) after improving 0.5% in September. Real spending of furniture & appliances gained 1.2% (-0.7% y/y) after two months of slight decline. Real spending on recreational goods & vehicles rose 1.0% (5.5% y/y) after a 0.3% gain. Real spending on nondurable goods rose 0.3% (-1.4% y/y) after rising 0.7% in September as outlays on gasoline & other energy products fell 0.8% (-1.0% y/y) following two months of strong increase. Apparel spending rose 0.3% (1.2% y/y) after rising 1.6% in September and real outlays on food & beverages gained 0.4% (-5.2% y/y). Spending on consumer services improved 0.2% (2.8% y/y), the same as in September. Real transportation services outlays improved 0.3% (3.6% y/y) after a 0.5% rise while real housing & utilities expenditures rose 0.2% (1.3% y/y) after holding steady in September. Real healthcare spending gained 0.3% in last month (2.1% y/y) after a 0.2% rise. Recreation services buying improved 0.2% (4.8% y/y), the same as in September, but real expenditures at restaurants & hotels strengthened 0.6% (6.7% y/y) after rising 0.9%.

The PCE chain price index rose 0.3%, the same as in the prior two months. The 6.0% y/y rise remained below the June peak of 7.0%. It remains nearly the highest rate of price inflation in over 40 years. A 0.2% m/m increase in the price index less food & energy followed two months of 0.5% gain. The 5.0% y/y gain stands close to y the largest since the autumn of 1983. Food & beverage prices rose 0.4% (11.6% y/y). Energy prices strengthened 2.6% (18.4% y/y) following three months of decline.

Nondurables prices rose 0.8% (9.2% y/y) as energy prices moved higher. The overall gain included a second straight 0.5% drop (+4.4% y/y) in apparel prices. The services price index followed with a 0.4% gain (5.4% y/y), after two months of 0.6% increase. The rise reflected a 0.5% gain (16.1% y/y) in transportation prices. Housing & utilities costs rose a moderate 0.4% (7.8% y/y). Recreation services costs rose 0.6% (4.1% y/y) after no change in September. The decline in the durable goods price index of 0.6% (+4.0% y/y) came after a 0.4% September increase. Motor vehicles and parts prices fell 0.6% (+6.6% y/y) and home furnishings weakened 0.8% (+7.3% y/y). Recreational goods prices weakened 0.2% (-0.4% y/y

Personal income rose 0.7% (4.9% y/y) during October versus expectations for a 0.4% rise. The gain reflected a 0.5% rise (6.7% y/y) in wages & salaries, corresponding to continued employment growth. No change (3.9% y/y) in proprietors' income was accompanied by a second straight 0.4% gain (8.2% y/y) in rental income. Receipts on assets rose 1.0% (5.1% y/y) as interest income increased 0.6% (6.5% y/y) and dividend income jumped 1.5% (3.7% y/y). Personal transfer receipts increased 1.6% (0.5% y/y). Disposable income rose 0.7% last month (2.8% y/y) after increasing 0.3% in each of the prior two months while real disposable earnings rose 0.4% (-3.0% y/y) following little change in September.

The personal saving rate fell to a near-record low of 2.3% in October. The level of personal savings fell 4.8% and was 67.9% lower 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.