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Economy in Brief

U.S. Personal Spending Is Restrained As Saving Increases
by Tom Moeller  March 28, 2016

Personal consumption expenditures during February increased a minimal 0.1% (3.8% y/y) for the third consecutive month. January's gain was revised from 0.5%. The latest rise matched expectations in the Action Economics Forecast Survey. Spending on durable goods edged 0.1% higher (3.7% y/y) following a 0.7% decline, revised from 1.2%. Motor vehicle purchases gained 0.2% (1.3% y/y) after a 0.4% decline, revised from +2.2%. Purchases of furniture & durable household equipment fell 0.3% (+4.4% y/y) following a downwardly revised 0.2% gain. Purchases of recreational products & vehicles declined slightly (+6.1% y/y) after a 1.6% fall, which was revised from a +0.9% jump. Nondurable goods spending fell 1.1% (+0.9% y/y), the fifth decline in the last six months. Gasoline purchases were off 11.2% (-7.8% y/y due to lower prices. Constant dollar spending on gasoline rose 0.5% and was unchanged y/y. Clothing & footwear purchases rose 0.3% (7.4% y/y). Services spending strengthened 0.4% (4.7% y/y) as food services & accommodations spending recovered 0.9% (6.5% y/y) after a 0.8% decline. Recreation services spending also was firm and increased 0.4% (7.9% y/y).

Adjusted for price inflation, personal consumption rose 0.2% (2.8% y/y) after little change in January, revised from 0.4%.

Personal income improved 0.2% (4.0% y/y) after an unrevised 0.5% increase. A 0.1% increase had been expected. Wages & salaries eased 0.1% (+4.3% y/y), following a 0.6% jump. Rental income strengthened 1.0% (8.0% y/y) while proprietors income remained unchanged (3.6% y/y). Transfer payments increased 0.5% (4.3% y/y) as Medicaid receipts rose 0.7% (5.9% y/y). Social security payments increased a steady 0.4% (5.0% y/y). Unemployment insurance payments remained unchanged (-6.5% y/y).

Disposable personal income increased 0.2% (3.7% y/y), softer than January's 0.4% gain. Adjusted for price increases, take-home pay rose a steady 0.3% (2.7% y/y).

The personal savings rate improved to 5.4%, the highest level in twelve months.

The chain-type price index eased +0.1%, but the y/y increase of 1.0% compared to a 0.3% rise during all of last year. It was the firmest twelve month rise since late-2014. The price index excluding food & energy also nudged 0.1% higher (1.7% y/y), the strongest y/y rise since January 201July 2014. The service price index edged up 0.1% (2.1% y/y) and has been strengthening for a year. The durable goods index declined 0.3% (-1.5%), but y/y rate of decline compares with -2.3% a year ago. The nondurables price index fell 0.8% (-1.4% y/y) with lower gasoline prices.

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 (%) Feb Jan Dec Feb Y/Y 2015 2014 2013
Personal Income 0.2 0.5 0.3 4.0 4.4 4.4 1.1
  Wages & Salaries -0.1 0.6 0.2 4.3 4.6 5.1 2.7
Disposable Personal Income 0.2 0.4 0.3 3.7 3.7 4.2 -0.1
Personal Consumption Expenditures 0.1 0.1 0.1 3.8 3.4 4.2 3.1
Personal Saving Rate 5.4 5.3 5.0 5.4
(Feb. '15)
5.0 4.8 4.8
PCE Chain Price Index -0.1 0.1 -0.1 1.0 0.3 1.4 1.4
  Less Food & Energy 0.1 0.3 0.1 1.7 1.3 1.5 1.5
Real Disposable Income 0.3 0.3 0.3 2.7 3.4 2.7 -1.4
Real Personal Consumption Expenditures 0.2 -0.0 0.2 2.8 3.1 2.7 1.7
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