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Economy in Brief

U.S. Personal Income Growth Slows While Spending Is Unchanged
by Tom Moeller  May 1, 2017

Personal income increased 0.2% during March following a 0.3% February rise, revised from 0.4%. A 0.3% increased had been expected in the Action Economics Forecast Survey. The 4.5% y/y gain compared to 3.6% growth during all of 2016. Wages & salaries ticked 0.1% higher (5.5% y/y), the weakest increase since August. Rental incomes remained strong and posted a 0.7% increase (5.6% y/y). Proprietors' income gained 0.6% (4.2% y/y). Transfer receipts rose 0.4% (3.8% y/y) as Social Security payments strengthened 0.8% (3.8% y/y). Medicare receipts rose 0.4% (4.5% y/y) and Medicaid payments notched 0.1% higher (4.9% y/y). Personal interest income rose 0.4% (4.1% y/y) for the third straight month and dividend income edged 0.1% higher (0.6% y/y).

Disposable personal income increased 0.2% (4.3% y/y) following three months of 0.3% gain. A decline in the price index left real disposable earnings up 0.5% (2.4% y/y), the strongest increase since December 2015.

The PCE chain price index declined 0.2% following a 0.1% rise. It was the first decline since February 2016. The y/y gain eased to 1.8%. The price index excluding food & energy slipped 0.1% lowering the y/y rise to 1.6%. That was the weakest monthly gain since July. The price index for energy goods & services declined 3.4% (+13.2% y/y) while the food price index rose 0.4% (-0.7% y/y).

Personal spending held steady (4.7% y/y) following little change in February, revised from 0.1%. A 0.2% gain had been expected. When adjusted for lower prices, personal spending increased 0.3% (2.8% y/y) following two months of decline. Real spending on durable goods declined 0.7% (+6.8% y/y) after a 0.1% rise. Spending on motor vehicles & parts fell 3.8% (+4.8% y/y), the third straight monthly decline. Purchases of home furnishings & appliances gained 0.6% (5.7% y/y) after two months of little change. Buying of recreational goods & vehicles strengthened 1.1% (13.7% y/y) after a 2.5% jump. Nondurable goods purchases improved 0.3% (2.4% y/y) after two months of slight decline. Gasoline & other energy goods purchases weakened 2.1% (-4.4% y/y) and reversed February's rise. Clothing & footwear purchases rose 1.8% (0.2% y/y). Real spending on services increased 0.4% (2.3% y/y) after two months of decline. Recreation services spending jumped 1.3% (3.8% y/y) following a 0.6% drop, but health care spending notched just 0.1% higher (3.8% y/y) following two months of 0.2% rise.

The personal savings rate improved to 5.9% from 5.7%. It was the highest level since August. The level of personal saving declined, however, by 1.3% 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.

Personal Income & Outlays (%) Mar Feb Jan Mar Y/Y 2016 2015 2014
Personal Income 0.2 0.3 0.4 4.5 3.6 4.4 5.2
  Wages & Salaries 0.1 0.5 0.4 5.5 4.3 5.1 5.1
Disposable Personal Income 0.2 0.3 0.3 4.3 3.9 3.8 5.1
Personal Consumption Expenditures 0.0 -0.0 0.2 4.7 3.9 3.5 4.4
Personal Saving Rate 5.9 5.7 5.4 5.8
(March '16)
5.8 5.8 5.6
PCE Chain Price Index -0.2 0.1 0.4 1.8 1.1 0.3 1.5
  Less Food & Energy -0.1 0.2 0.3 1.6 1.7 1.4 1.6
Real Disposable Income 0.5 0.2 -0.1 2.4 2.8 3.5 3.5
Real Personal Consumption Expenditures 0.3 -0.1 -0.3 2.8 2.7 3.2 2.9
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