U.S. Consumer Spending Unexpectedly Holds Steady in March

Personal consumption expenditures (PCE) were unchanged (+6.2% y/y) during March after a 0.1% uptick in February, revised from 0.2%. A 0.1% slip had been expected in the Action Economics Forecast Survey. Adjusted for a 0.1% rise in the chain price index, real PCE eased slightly (+1.9% y/y) following a 0.2% decline, revised from -0.1%.

Real spending on durable goods dropped 0.8% (+2.5% y/y) following a little-revised 1.3% February decline. Real spending on motor vehicle & parts fell 1.8% last month (+4.1% y/y) the fourth sharp decline in five months. Real spending on furniture & appliances weakened 0.7% (+1.2% y/y) after a 1.7% drop. Real spending on recreational goods & vehicles edged 0.1% higher (4.1% y/y) after a 0.4% February decline.

Real spending on nondurable goods slipped 0.1% (+0.1% y/y) after a 0.2% improvement. Apparel spending fell 1.4% (+0.7% y/y) in real terms last month after a 1.4%% February shortfall. Outlays on gasoline & other energy products rose 2.4% (0.4% y/y) last month following a 2.6% February decline. Real food & beverage outlays eased 0.1% (-2.1% y/y) following a 0.2% rise in February.

Real spending on consumer services rose 0.1% (2.4% y/y) in March after a 0.2% decline. Recreation services buying declined 0.5% (+3.3% y/y) following a 0.9% decline, while real food services and accommodations eased 0.2% (+3.2% y/y) following a 2.3% decline. Real transportation services outlays weakened 1.3% (0.3% y/y) following two months of strong increase while real housing & utilities expenditures rose 0.9% (1.4% y/y) after a 0.2% gain. Real healthcare spending gained 0.4% (4.8% y/y) for the third straight month. Financial services & insurance expenditures fell 0.2% (+1.5% y/y) and reversed February’s gain.

Personal income rose 0.3% (6.0% y/y) in March after an unrevised 0.3% February rise. A 0.2% rise had been expected in the Action Economics Forecast Survey. The gain reflected a 0.3% (7.0% y/y) rise in wages & salaries following a 0.3% increase in February. Proprietors' income eased 0.1% (+2.2% y/y) last month following a 0.2% decline in February. Rental income rose 1.4% (13.5% y/y) for the second consecutive month. Receipts on assets rose 0.5% (5.8% y/y) after a rise of 0.1% in February as dividend income surged 1.3% (3.9% y/y) and interest income eased 0.1% (+7.7% y/y) for the third straight month. Personal transfer receipts slipped marginally (+4.5% y/y) in March after a 0.7% February rise.

Disposable income rose 0.4% (8.3% y/y) last month following a 0.5% rise in February. Taxes fell 0.1% (-7.3% y/y), after five months of decline. Real disposable earnings rose 0.3% (4.0% y/y) last month following a 0.2% gain in February.

The personal saving rate rose to 5.1% from 4.8% in February. The level of personal savings increased 5.3% (44.0% y/y) after rising 7.5% in February.

The PCE chain price index increased 0.1% (4.2% y/y) in March following a 0.3% gain. The core index excluding food & energy prices rose 0.3% (4.6% y/y), the same as in February. Goods prices slipped 0.2% (+1.6% y/y) following a 0.1% uptick while services prices gained 0.2% (5.5% y/y), down from 0.4% in February and 0.6% in January. The PCE services price index excluding energy & healthcare increased 0.2% (6.3% y/y) after a 0.5% February increase. Energy prices fell 3.7% (-9.8% y/y) in March following a 0.5% dip while food prices fell 0.2% (+8.0% y/y) and reversed the February rise.

The personal income and consumption figures are available in Haver's USECON database with detail in the USNA database. The Action Economics forecasts are in AS1REPNA.