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Economy in Brief

U.S. Personal Spending Surges With Higher Prices in March
by Tom Moeller  April 29, 2022

• Gasoline leads nominal spending but falls in real terms.

• Core price inflation eases m/m.

• Wage & salary growth remains firm.

Personal consumption expenditures jumped 1.1% during March (9.1% y/y) following a 0.6% February gain, revised from 0.2%. A 0.7% rise had been expected in the Action Economics Forecast Survey. Adjusted for price inflation, spending increased 0.2% last month (2.3% y/y) after rising 0.1% in February.

Real spending on durable goods declined 0.9% in March (-10.7% y/y), the same as in February. The decline reflected a 2.0% drop (-23.5% y/y) in real outlays on motor vehicles & parts after falling 3.7% in February. Real furniture & appliance outlays weakened 1.3% (-9.9% y/y) easing 0.4% in the prior month. Real outlays on recreational goods & vehicles improved 0.3% (0.1% y/y) after holding steady in February. Real nondurable goods buying fell 0.3% in March (-0.8% y/y) after a 0.7% decline. Adjusted for inflation, clothing outlays eased slightly (-3.4% y/y) after a 0.8% February decline. Real food & beverage expenditures fell 0.4% (-2.8% y/y) after falling 1.6%. Real spending on gasoline & other energy products weakened 1.6% (+2.2% y/y) after rising 2.9% in February. Real outlays on services improved 0.6% (6.3% y/y) in March, the same as in February. Housing & utilities spending improved 0.1% (1.2% y/y) as it followed a 0.6% decline. Real outlays on recreation services offset that decline and surged 1.5% (18.7% y/y) after strengthening 1.8% in May. Real spending at hotels & restaurants jumped 1.2% last month (13.4% y/y) after rising 2.8% in February.

Pricing power continued to strengthen last month. The PCE chain price index rose 0.9% in March (6.6% y/y) following three consecutive months of 0.5% increase. The price index excluding food and energy rose 0.3%, with the 5.2% y/y gain remaining near the strongest rise since 1983. Durable goods prices slipped 0.1% (+10.2% y/y). The nondurables goods price index strengthened 2.8% (10.7% y/y) after rising 1.8% in February as gasoline & oil costs surged 18.0% (48.3% y/y) after a 6.7% rise. The services price index rose 0.4% last month (4.5% y/y) after rising 0.2%.

Personal income rose 0.5% (-11.6% y/y) during March following a 0.7% rise. Wages & salaries increased 0.6% last month (11.7% y/y) after strengthening 1.1% in February. Rental income rose 0.7% (5.0% y/y) after two months of 0.6% gain. Proprietors' income rose 0.8% (5.3% y/y) after a 1.5% rise. Transfer receipts rose 0.3% (-51.5% y/y) after easing slightly in February.

Disposable personal income increased 0.5% (-14.7% y/y) in March, after rising 0.7% in February. Adjusted for price inflation, disposable income fell 0.4% (-19.9% y/y) after a 0.1% uptick.

The personal savings rate eased to 6.2% in March from 6.8% in February. It remained down from a high of 33.8% in April of 2020. The level of personal savings fell 7.9% last month and has fallen by roughly three-quarters during the last twelve months.

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

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