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Economy in Brief

U.S. Personal Spending Remains Unchanged; Income Increases Slowly
by Tom Moeller  September 30, 2016

Personal consumption expenditures were flat during August (3.8% y/y) following a 0.4% July advance, revised from 0.3%. A 0.1% rise had been expected in the Action Economics Forecast Survey. So far this year, spending has risen at a 4.0% annual rate compared to a 3.5% rise during all of last year. Adjusted for price inflation, spending eased 0.1% (+2.6% y/y) last month after a 0.3% gain.

Current dollar purchases of durable goods declined 1.3% (+3.0% y/y) after a 2.1% gain. Motor vehicle & parts spending fell 3.0% (+1.3% y/y) following a 6.1% jump. Sales of home furnishings & appliances declined 1.0% (+2.7% y/y) after a 0.5% fall. Spending on recreational goods & vehicles were off 0.4% (+4.4% y/y). A 0.2% decline (+0.2% y/y) in nondurable goods spending owed to a 1.8% fall (-17.0% y/y) in spending on gasoline as pump prices eased 0.8% (-16.6% y/y). Clothing purchases declined 0.1% (+0.9% y/y) following a 0.3% fall. Services purchases increased 0.3% (4.8% y/y) led by a 0.5% rise (4.6% y/y) in spending on housing & utilities. Spending at restaurants & hotels gained 0.2% (5.7% y/y), but recreation purchases fell 0.2% (+4.2% y/y).

Personal income improved 0.2% (3.1% y/y) following an unrevised 0.4% rise. A 0.2% rise had been expected. Disposable personal income gained 0.2% (3.4% y/y). In chained dollars, take-home pay nudged 0.1% higher (2.4% y/y) after a 0.3% rise. So far this year, real disposable income has risen at a 2.0% annual rate following a 3.5% increase last year.

Wage & salary income improved a scant 0.1% (3.7% y/y) following two months of 0.5% increase. Rental income jumped 0.7% (6.4% y/y) and built on a 0.5% rise. Receipts on assets increased 0.5% (-0.1% y/y) after a 0.3% rise, while personal transfer receipts gained 0.4% (3.5% y/y) for the second straight month.

The personal savings rate improved to 5.7%, its highest level in three months. Personal savings rose 0.2% y/y.

The PCE chain price index ticked 0.1% higher (1.0% y/y) and has risen at a 1.4% rate so far this year. Excluding food & energy, the index rose 0.2% (1.7% y/y) following two straight 0.1% upticks. The durable goods index eased slightly (-2.0% y/y) but the nondurables index moved 0.1% higher (-1.7% y/y). The services price index gained 0.2% (2.3% 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. Further detail is in USNA.

From the Vault: Does Forward Guidance Work? from the Federal Reserve Bank of New York is available here.

Personal Income & Outlays (%) Aug Jul Jun Aug Y/Y 2015 2014 2013
Personal Consumption Expenditures 0.0 0.4 0.5 3.8 3.5 4.4 2.8
Personal Income 0.2 0.4 0.3 3.1 4.4 5.2 1.1
  Wages & Salaries 0.1 0.5 0.5 3.7 5.1 5.1 2.7
Disposable Personal Income 0.2 0.4 0.3 3.4 3.8 5.1 -0.1
Personal Saving Rate 5.7 5.6 5.5 5.9
(Aug. '15)
5.8 5.6 5.0
PCE Chain Price Index 0.1 0.0 0.1 1.0 0.3 1.5 1.3
  Less Food & Energy 0.2 0.1 0.1 1.7 1.4 1.6 1.5
Real Personal Consumption Expenditures -0.1 0.3 0.4 2.6 3.2 2.9 1.5
Real Disposable Income 0.1 0.3 0.2 2.4 3.5 3.5 -1.4
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