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Economy in Brief

U.S. Personal Income & Spending Strengthen
by Tom Moeller  October 30, 2017

Personal income increased 0.4% (3.0% y/y) during September following an unrevised 0.2% August rise. It was the largest income gain since February and matched expectations in the Action Economics Forecast Survey. The Commerce Department indicated that the figures reflect the effects of Hurricanes Harvey & Irma, which were not quantified. Wages & salaries rose 0.4% (3.2% y/y) following an upwardly revised 0.1% gain. Rental income grew 0.6% (5.4% y/y) after a 0.3% increase. Proprietors' income also improved 0.6% (2.6% y/y) following a 0.3% rise. Dividend income jumped 0.8% (2.5% y/y) after a 0.3% gain. Personal interest income improved 0.3% (3.2% y/y) for the third straight month. Personal transfer receipts rose 0.2% (2.7% y/y) after a 0.3% increase. Social Security payments moved 0.4% higher (3.5% y/y), the firmest rise in three months. Medicare payments gained a steady 0.3% (2.8% y/y). Unemployment insurance benefits declined 1.1% (-8.7% y/y), about as they did in August.

Disposable income gained 0.4% (2.9% y/y), the strongest rise since May. Adjusted for price changes take-home pay eased slightly (+1.2% y/y) and continued the lethargic movement of the last four months.

Personal consumption expenditures jumped 1.0% (4.4% y/y) last month, the strongest rise since August 2009. A 0.9% gain had been expected. Adjusted for price change, personal spending increased 0.6% (2.7% y/y) after a 0.1% slip. Real durable goods purchases surged 3.5% (7.3% y/y), reflecting a 9.9% jump (8.5% y/y) in motor vehicle buying. Real furniture purchases jumped 1.0% (6.5% y/y), while real spending on recreational goods & vehicles rose 0.6% (8.2% y/y). Constant dollar spending on nondurable items rose 0.3% (2.6% y/y) for a second straight month. Real purchases of clothing & footwear increased 0.5% (1.7% y/y) following three straight months of decline. Real spending on gasoline & oil declined 1.5% (-2.8% y/y) after a 0.4% gain. Real spending on food & beverages rose 0.5% (2.5% y/y). Real spending on services improved 0.3% (2.0% y/y) following no change. Real recreation spending jumped 1.2% (3.4% y/y), the strongest rise in six months. Real outlays on health care rose 0.1% (2.3% y/y), but housing & utilities expenditures improved 0.4% (0.8% y/y) after three months of decline.

The personal savings rate weakened to 3.1%, the lowest level since December 2007. Personal saving declined by roughly one quarter y/y.

The chain-type price index increased 0.4% (1.6% y/y), the strongest increase since January. Excluding food & energy, prices increased 0.1% (1.3% y/y) for the fifth straight month. Nondurable goods prices jumped 1.2% (2.0% y/y) with a 12.2% surge (18.3 y/y) in gasoline prices. Durable goods prices declined 0.3% (-2.1% y/y), down for the eighth straight month. The price index for recreational goods & vehicles fell 0.4% (-3.4% y/y). Services prices improved 0.2% (2.1% y/y) for the fourth month in five.

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 (%) Sep Aug Jul Sep Y/Y 2016 2015 2014
Personal Income 0.4 0.2 0.3 3.0 2.4 5.0 5.3
  Wages & Salaries 0.4 0.1 0.5 3.2 2.9 5.1 5.1
Disposable Personal Income 0.4 0.1 0.2 2.9 2.6 4.5 5.1
Personal Consumption Expenditures 1.0 0.1 0.4 4.4 4.0 3.9 4.4
Personal Saving Rate 3.1 3.6 3.6 4.5
(Sep '16)
4.9 6.1 5.7
PCE Chain Price Index 0.4 0.2 0.1 1.6 1.2 0.3 1.5
  Less Food & Energy 0.1 0.1 0.1 1.3 1.8 1.3 1.6
Real Disposable Income -0.0 -0.1 0.1 1.2 1.4 4.2 3.6
Real Personal Consumption Expenditures 0.6 -0.1 0.3 2.7 2.7 3.6 2.9
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