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Economy in Brief

U.S. Personal Income & Spending Remain Firm
by Tom Moeller  November 30, 2017

Personal income rose 0.4% (3.4% y/y) during October following an unrevised 0.4% September increase. These gains are the largest since February and compared to a 0.3% rise expected 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 0.3% (3.7% y/y) following a 0.5% increase, revised from 0.4%. Rental income surged 1.1% (6.0% y/y), the largest increase since April 2015. Proprietors' income improved 0.4% (3.4% y/y) following a 0.6% rise. Interest income surged 1.3% (3.8% y/y) following three straight months of 0.3% gain. Dividend income ticked 0.1% higher (2.2% y/y) following a 0.6% rise. Personal transfer receipts improved 0.2% (2.6% y/y), the same as in September. Social Security payments strengthened 0.7% (3.1% y/y), the firmest rise in nine months. Medicare payments gained a steady 0.3% (2.8% y/y). Unemployment insurance benefits declined 2.1% (-10.1% y/y), double that in each of the prior two months.

Disposable income gained 0.5% (3.2% y/y), the strongest rise since February. Adjusted for price changes, take-home pay gained 0.3% (1.6% y/y) following four consecutive months of zero increase.

Personal consumption expenditures rose 0.3% (4.2% y/y) after a 0.9% jump, revised from 1.0%. A 0.2% gain had been expected. Adjusted for price inflation, personal spending gained 0.1% (2.6% y/y) after a 0.5% increase. Real durable goods purchases eased 0.1% (5.8% y/y) after a 3.1% jump. Motor vehicle buying declined 1.0% (+3.9% y/y) after end-of-model-year promotions pumped up September's increase to 8.8%. Real spending on home furnishings & appliances improved 0.2% (7.2% y/y) after a 1.1% jump. Real spending on recreational goods & vehicles also rose 0.2% (6.8% y/y) following a 0.1% uptick. Constant dollar spending on nondurable items rose 0.5% (2.9% y/y) after a 0.1% rise. Real purchases of clothing & footwear increased 0.6% (2.1% y/y) after four straight months of lethargy. Real spending on gasoline & oil rebounded 0.6% (1.4% y/y) after a 2.7% drop. Real spending on food & beverages rose 0.4% (1.9% y/y). Real spending on services held steady (2.0% y/y) following a 0.2% rise. Real recreation spending declined 0.7% (+2.8% y/y) and took back roughly half of September's surge. Real outlays on health care rose 0.1% (2.7% y/y) after three straight months of strong increase, while housing & utilities expenditures also improved 0.1% (1.0% y/y) after a 0.2% rise.

The personal savings rate increased to 3.2% from its ten-year low of 3.0%. Personal saving declined by nearly one quarter y/y.

The PCE chain-type price index improved 0.1% (1.6% y/y) after a 0.4% jump. Excluding food & energy, prices increased 0.2% (1.4% y/y) following five straight 0.1% gains. Nondurable goods prices declined 0.3% (+1.3% y/y) with a 2.1% decline (+10.5 y/y) in gasoline prices which followed a 12.2% jump. Durable goods prices held steady (-1.9% y/y) after eight consecutive months of decline. The price index for recreational goods & vehicles eased 0.1% (-2.7% y/y) while motor vehicle costs rose 0.2% (-1.0% y/y). Services prices improved 0.3% (2.2% y/y) for a second straight month. The increase was led by a 0.8% rise (3.3% y/y) in financial services & insurance prices, and a 0.6% increase (3.2% y/y) in transportation services prices. 

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 (%) Oct Sep Aug Oct Y/Y 2016 2015 2014
Personal Income 0.4 0.4 0.2 3.4 2.4 5.0 5.3
  Wages & Salaries 0.3 0.5 0.1 3.7 2.9 5.1 5.1
Disposable Personal Income 0.5 0.4 0.1 3.2 2.6 4.5 5.1
Personal Consumption Expenditures 0.3 0.9 0.2 4.2 4.0 3.9 4.4
Personal Saving Rate 3.2 3.0 3.4 4.1
(Oct '16)
4.9 6.1 5.7
PCE Chain Price Index 0.1 0.4 0.2 1.6 1.2 0.3 1.5
  Less Food & Energy 0.2 0.2 0.1 1.4 1.8 1.3 1.6
Real Disposable Income 0.3 -0.0 -0.1 1.6 1.4 4.2 3.6
Real Personal Consumption Expenditures 0.1 0.5 -0.0 2.6 2.7 3.6 2.9
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