U.S. Personal Income Gain Strengthens and Outpaces Spending

Personal income posted a 0.6% increase (3.9% y/y) during October following 0.4% September rise, revised from 0.3%. It was the largest increase in six months. A 0.4% increase had been expected in the Action Economics Forecast Survey. Disposable personal income also increased 0.6% (4.1% y/y) after a 0.4% rise. Adjusted for higher prices, take-home pay improved 0.4% (2.7% y/y), the largest rise since December 2015.

Wages & salaries rose a steady 0.5% (4.3% y/y). Receipts on assets jumped 1.2% (2.5% y/y), the strongest rise since April 2014. Rental income gained 0.7% (5.9% y/y) following a 0.5% increase. Proprietors' income improved 0.5% (2.8% y/y) after a 0.9% strengthening. Transfer receipts gained 0.5% (3.9% y/y). That reflected a 1.1% jump (3.8% y/y) in Social Security payments following two months of 0.2% increase. Medicare payments rose 0.3% (5.2% y/y) for the fourth straight month. Medicaid receipts inched 0.1% higher (5.3% y/y), also following four straight months of strong gain. Unemployment insurance benefits declined 2.4% (-8.1% y/y) with the improved job market.

Personal consumption expenditures increased 0.3% (4.2% y/y) after a 0.7% September improvement from no change in August. Both of these figures were upwardly revised from 0.5% and -0.1%, respectively. A 0.5% increase had been expected in the Action Economics Forecast Survey.

Adjusted for higher prices, spending rose 0.1% (2.8% y/y) after a 0.5% increase. A 1.0% rise (8.3% y/y) in real durable goods spending led last month's rise as recreational goods & vehicles surged 2.0% (11.3% y/y). Real motor vehicle purchases increased 1.1% (8.5% y/y) after a 5.3% rise. Home furnishings & appliance spending declined 0.2% (+6.4% y/y) after a 0.9% gain. Real nondurable goods purchases increased 0.8% (2.9% y/y) as eating out jumped 1.1% (5.2% y/y) after a 0.2% increase. Clothing purchases rose 0.2% (1.4% y/y) following a 0.3% gain. Real services outlays declined 0.3% (+1.9% y/y) and reversed the September rise. A 1.3% decline (+1.5% y/y) in restaurant & accommodations spending led the decline after a 0.8% increase. A 1.0% fall (-0.6% y/y) in recreation services outlays added to the weakness. Health care outlays rose 0.2% (4.5% y/y) following two months of similar gain.

The personal savings rate increased to 6.0% from 5.7%, but it remained below the high of 6.2% in March. The level of personal savings increased 3.9% y/y.

The chain price index increased 0.2% (1.4% y/y) for the third straight month, while excluding food & energy prices notched 0.1% higher (1.7% y/y) for the fourth month in five. A 6.5% increase (-0.9% y/y) in gasoline prices led the index higher. Clothing prices added to the rise with a 0.3% increase, and they were up 0.3% y/y as well. The durable goods price index remained steady (-2.4% y/y) after a 0.5% drop. A 0.7% decline in recreational goods prices (-6.0% y/y) paced the weakness. The services price index increased 0.2% (2.4% y/y) as it has in all but two months this year.

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.

The Fed's latest Beige Book covering regional economic conditions is available here.