Haver Analytics
Haver Analytics
| Mar 29 2024

U.S. Personal Spending Strengthens; Core Price Gain Moderates

  • Spending growth rebounds.
  • Disposable income increase slows.
  • PCE price index gain weakening is broad-based.

Personal consumption expenditures (PCE) rose 0.8% (4.9% y/y) during February after rising an unrevised 0.2% in January. A 0.5% increase had been expected in the Action Economics Forecast Survey. Adjusted for price changes, PCE rose 0.4% last month (2.4% y/y) after a 0.2% January decline, revised from -0.1%.

Real spending on durable goods rebounded 1.2% last month (1.6% y/y) after falling 2.7% in January. Real spending on motor vehicles surged 3.8% (-4.5% y/y) after a 5.0% decline. Real home furnishings & appliance outlays improved 0.4% (2.2% y/y) after falling 0.9% in January while real spending on recreational goods & vehicles declined 1.1% (+6.5% y/y) after weakening 2.6% in January. Real spending on nondurable goods fell 0.6% last month (+0.8% y/y) after falling 0.5% in January. Real clothing and footwear purchases were off 1.5% (+0.6% y/y) following a 0.6% rise. Real food & beverage buying eased 0.2% (-0.1% y/y), the third consecutive monthly decline. Real spending on services increased 0.6% (3.0% y/y) following two consecutive 0.3% gains. Real spending on transportation services surged 2.6% (5.3% y/y) in February after rising 0.3% in January. Real spending on food services & accommodations improved 0.4% (2.9% y/y) after declining 1.0% in January, but real spending on financial services & insurance rose 1.1% last month (4.6% y/y), about the same as in each of the prior three months. Real spending on housing & utilities held steady (+1.6% y/y) after rising 0.5% in the prior month while real healthcare spending rose 0.3% (4.2% y/y), as it did in January.

Personal income rose 0.3% (4.6% y/y) in February following a 1.0% January surge. A 0.4% increase had been expected. A 0.8% rise (5.8% y/y) in wages & salaries came after a 0.3% January increase. Rental income jumped 1.6% (8.0% y/y) following a 1.4% increase and proprietors’ income rose 0.6% (3.5% y/y) after a 0.1% slip during January. Income from assets fell 2.1% (+2.9% y/y) after a 1.8% rise and current transfer receipts rose 0.6% (3.1% y/y) after surging 2.8% in January. Government social benefits strengthened 1.0% (3.0% y/y) after surging 2.5% in January.

Disposable personal income increased 0.2% (4.1% y/y) in February following a 0.4% January rise. After adjusting for price changes, disposable income eased 0.1% (+1.7% y/y) last month after holding steady in January. It was the weakest m/m reading in five months.

As spending growth outpaced the gain in disposable income, the personal saving rate fell to 3.6% from an upwardly revised 4.1% in January. The rate was down from a May 2023 high of 5.3%. Personal saving declined 11.8% (-19.5% y/y) after rising 5.4% in January.

The PCE chain price index rose 0.3% (2.5% y/y) in February after increasing 0.4% in January, revised from 0.3%. These increases were up from minimal change during the prior three months. The index excluding food and energy rose 0.3% (2.8% y/y) after a 0.5% January increase, revised from 0.4%. Goods prices rose 0.5% last month (-0.2% y/y) following four straight monthly declines. Services prices rose 0.3% (3.8% y/y) following a 0.6% increase. Services prices excluding energy & healthcare increased 0.3% (4.2% y/y) after rising 0.6% in January. Food prices edged 0.1% higher (1.3% y/y) last month after rising 0.5% in January, while energy prices increased 2.3% (-2.3% y/y) after falling in each of the prior four months.

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.

There’s Still No Rush from Fed governor Christopher J. Waller is available here.

  • 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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