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Economy in Brief

U.S. Personal Income & Spending Strengthen M/M
by Tom Moeller  January 30, 2017

Personal income increased 0.3% (3.5% y/y) during December following a 0.1% November uptick, initially reported as no change. A 0.4% rise had been expected in the Action Economics Forecast Survey. During all of 2016, income grew 3.5%, the weakest rise since 2013. Wages & salaries rebounded 0.4% last month (3.6% y/y) after a 0.1% slip. Rental income surged 1.0% (7.3% y/y), but proprietors' income remained unchanged (2.0% y/y). Transfer receipts increased 0.3% (3.3% y/y) as Social Security benefits rose 0.3% (1.8% y/y) and Medicare payments improved 0.2% (4.7% y/y). Unemployment insurance benefits jumped 2.1%, but were down 8.2% y/y.

Disposable personal income increased 0.3% (3.7% y/y) following a 0.1% rise. Adjusted for price inflation, take-home pay edged 0.1% higher (2.1% y/y).

Personal consumption expenditures jumped an expected 0.5% (4.5% y/y). It was the strongest rise in three months. During all of last year expenditures rose 3.8%. In constant dollars, spending improved 0.3% (2.8% y/y). Real durable goods purchases increased 1.4% (8.1% y/y) as motor vehicle purchases rebounded 2.4% (8.7% y/y). Real spending on recreational goods & vehicles strengthened 1.0% (11.7% y/y), and furniture & appliance buying ticked 0.1% higher (5.4% y/y). Real nondurable purchases remained unchanged (2.1% y/y). Real apparel purchases jumped 0.5% (0.8% y/y), but real gasoline spending fell 0.3% (-2.2% y/y), down for the third straight month. Real spending on services rose 0.3% (2.2% y/y) as housing & utilities outlays jumped 1.2% (2.3% y/y). Real recreation services spending also increased 1.5% (0.3% y/y), but food services & accommodations outlays rose 1.1% (+0.6% y/y).

The personal savings rate declined to 5.4%, its lowest level since March 2015. Personal saving declined 8.0% y/y.

The chain price index increased 0.2% (1.6% y/y). The nondurable goods price index rose 0.2% (1.2% y/y). The durable goods price index was little changed (-2.5% y/y), while the services price index gained 0.2% (2.4% y/y). The price index excluding good & energy inched 0.1% higher (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. Further detail is in USNA.

Personal Income & Outlays (%) Dec Nov Oct Dec Y/Y 2016 2015 2014
Personal Income 0.3 0.1 0.5 3.5 3.5 4.4 5.2
  Wages & Salaries 0.4 -0.1 0.5 3.6 4.2 5.1 5.1
Disposable Personal Income 0.3 0.1 0.5 3.7 3.8 3.8 5.1
Personal Consumption Expenditures 0.5 0.2 0.4 4.5 3.8 3.5 4.4
Personal Saving Rate 5.4 5.6 5.7 6.1
(Dec '15)
5.9 5.8 5.6
PCE Chain Price Index 0.2 0.1 0.3 1.6 1.1 0.3 1.5
  Less Food & Energy 0.1 0.0 0.1 1.7 1.7 1.4 1.6
Real Personal Consumption Expenditures 0.3 0.2 0.1 2.8 2.7 3.2 2.9
Real Disposable Income 0.1 0.0 0.2 2.1 2.7 3.5 3.5
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