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Economy in Brief

U.S. Personal Spending Growth Cools but Outpaces Income
by Tom Moeller  June 29, 2016

Personal consumption expenditures increased 0.4% (3.7% y/y) during May following a 1.1% April rise, revised from 1.0%. A 0.3% increase had been expected in the Action Economics Forecast Survey. So far this year, spending has risen at a 4.4% annual rate compared to a 3.4% rise during all of last year. Adjusted for price inflation, spending rose 0.3% (2.7% y/y) last month. Purchases of durable goods rose 0.6% (4.8% y/y) led by a 2.3% jump (12.5% y/y) in spending on recreational goods & vehicles. Motor vehicle spending rose 0.2% (-0.7% y/y) and furniture & appliance buying also gained 0.2% (5.1% y/y). Nondurable goods spending rose 0.5% (3.0% y/y) as food & beverage buying rose 1.1% (2.7% y/y). Gasoline purchases rose 0.6% (3.3% y/y) and apparel buying gained 0.2% (0.3% y/y). Services spending nudged 0.1% higher (2.3% y/y) led by a 1.0% jump (3.2% y/y) in transportation spending. Recreation services expenditures declined 1.2% (+0.8% y/y).

Personal income increased 0.2% (4.0% y/y) after a 0.5% rise, revised from 0.4%. A 0.3% increase had been expected. Wages & salaries grew 0.2% (4.6% y/y), the weakest rise in three months. Rental income increased 0.5% (6.6% y/y) and receipts on assets rose 0.4% (2.1% y/y). Transfer payments gained 0.2% (3.9% y/y) as Medicaid payments rose 0.5% (6.2% y/y). Social Security payments were little changed (2.6% y/y).

Disposable income increased 0.2% (4.1% y/y) following an unrevised 0.5% jump. In constant dollars, take home pay ticked 0.1% higher (3.2% y/y) after a 0.2% rise.

The personal savings rate eased to 5.3%, the lowest level this year and down from a 6.0% March high. Personal saving increased 13.4% y/y.

The chain type price index increased 0.2% (0.9% y/y) for a second straight month. Excluding food & energy, the price index rose 0.2% (1.6% y/y). The services price index increased a strengthened 0.3% (2.2% y/y). Nondurable goods prices inched 0.1% higher (-1.8% y/y) while durable goods prices declined 0.3% (-1.7% y/y).

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.

Health Spending Slowed Down in Spite of the Crisis from the Federal Reserve Bank of New York can be found here.

Personal Income & Outlays (%) May Apr Mar May Y/Y 2015 2014 2013
Personal Income 0.2 0.5 0.3 4.0 4.5 4.4 1.1
  Wages & Salaries 0.2 0.5 0.3 4.6 4.8 5.1 2.7
Disposable Personal Income 0.2 0.5 0.4 4.1 3.8 4.2 -0.1
Personal Consumption Expenditures 0.4 1.1 -0.0 3.7 3.4 4.2 3.1
Personal Saving Rate 5.3 5.4 6.0 4.8
(May '15)
5.0 4.8 4.8
PCE Chain Price Index 0.2 0.3 0.1 0.9 0.3 1.4 1.4
  Less Food & Energy 0.2 0.2 0.1 1.6 1.3 1.5 1.5
Real Disposable Income 0.1 0.2 0.3 3.2 3.4 2.7 -1.4
Real Personal Consumption Expenditures 0.3 0.8 -0.1 2.7 3.1 2.7 1.7
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