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Economy in Brief

U.S. Personal Spending Strengthens; Income Remains Firm
by Tom Moeller  May 31, 2016

Personal consumption expenditures during April jumped 1.0% (4.1% y/y) following no change in March, revised from 0.1%. The latest increase was the strongest since August 2009, and outpaced expectations for a 0.7% rise in the Action Economics Forecast Survey. Spending on durable goods was notably firm, rising 2.3% (3.7% y/y). The gain was led by a 5.1% jump (-0.1% y/y) in motor vehicles spending. Recreational goods & vehicle spending increased 1.5% (7.8% y/y) and purchases of home furnishings & appliances gained 0.7% (3.8% y/y). Spending on nondurable goods also was firm as it increased 1.4% (2.3% y/). Gasoline purchases rose 7.6% (-8.0% y/y) with higher prices. The gain adjusted for prices was 0.4% (4.3% y/y). Clothing spending rose 0.9% (1.9% y/y). Services spending improved 0.6% (4.7% y/y), led by a 1.2% rise (3.7% y/y) in housing & utilities. Recreation spending firmed 0.9% (6.5% y/y) while transportation outlays rose 0.8% (6.6% y/y). Recreation services spending strengthened 0.9% (6.5% y/y).

Adjusted for price inflation, personal consumption expenditures increased 0.6% last month (3.0% y/y) after little change in March.

A firmer job market continues to boost income. Personal income increased an expected 0.4% during April (4.4% y/y) following an unrevised 0.4% rise. Wages & salaries increased 0.5% (5.2% y/y) following a 0.4 increase. In other income categories, proprietors income rebounded 0.6% (3.7% y/y) after two months of slight decline, and rental income rose 0.4% (7.1% y/y). Transfer payments increased 0.5% (3.9% y/y) as Social Security receipts jumped 0.9% (3.1% y/y). Medicare payments rose 0.4% (5.4% y/y). Unemployment insurance payments declined 2.5% (-5.7% y/y).

Disposable personal income increased 0.5% (4.4% y/y) following March's 0.4% rise. Adjusted for price increases, take-home pay rose 0.2% (3.3% y/y) following a 0.3% increase.

The personal savings rate fell to 5.4% from 5.9%, revised from 5.4%. The level of personal savings rose 10.2% y/y.

The chain-type price index rose 0.3%, and the y/y increase of 1.1% compared to a 0.3% rise during all of last year. The price index excluding food & energy improved 0.2% (1.6% y/y). The nondurable goods price index jumped 0.7% (-0.9% y/y), the largest increase since May of last year. The services price index rose 0.2% (2.2% y/y), the same as it did in the prior two months. The durable goods index nudged 0.1% higher (-1.7%).

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

Personal Income & Outlays (%) Apr Mar Feb Apr Y/Y 2015 2014 2013
Personal Income 0.4 0.4 0.1 4.4 4.5 4.4 1.1
  Wages & Salaries 0.5 0.4 0.0 5.2 4.8 5.1 2.7
Disposable Personal Income 0.5 0.4 0.1 4.4 3.8 4.2 -0.1
Personal Consumption Expenditures 1.0 0.0 0.2 4.1 3.4 4.2 3.1
Personal Saving Rate 5.4 5.9 5.5 5.1
(Apr. '15)
5.0 4.8 4.8
PCE Chain Price Index 0.3 0.1 -0.1 1.1 0.3 1.4 1.4
  Less Food & Energy 0.2 0.1 0.2 1.6 1.3 1.5 1.5
Real Disposable Income 0.2 0.3 0.2 3.3 3.4 2.7 -1.4
Real Personal Consumption Expenditures 0.6 -0.0 0.3 3.0 3.1 2.7 1.7
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