U.S. Core PCE Price Gain Picks Up, but Real Spending Posts Solid Increase in September

The PCE chain price index rose 0.2% in September following unrevised increases of 0.1% and 0.2% in August and July. The y/y rise continued its downward trend. The 2.1% annual rise compares to its 7.2% y/y peak in June 2022. The price index excluding food and energy, however, moved 0.3% higher last month after three straight months of 0.2% increase. The y/y rise was steady at 2.7% and remained half of its 5.6% peak in February and March of 2022. Durable goods prices rose 0.3% (-1.9% y/y), after declines in four of the prior five months. Motor vehicle & prices rose 0.3% (-2.4% y/y), after declining steadily since December. Recreational product prices eased 0.3% (-2.0% y/y) but home furnishings costs rose 0.5% (-2.7% y/y). Nondurable goods prices eased 0.4% (-0.8% y/y) in September, off for the fourth month in five, but clothing prices rose 0.7% (1.4% y/y) after a 0.5% gain. Services prices increased 0.3% (3.7% y/y) after rising 0.2%. Housing & utility prices rose 0.4% (4.9% y/y) after a 0.3% rise, and services prices excluding energy & healthcare increased 0.3% (3.9% y/y) in September for the fourth straight month. Healthcare prices rose 0.4% (3.0% y/y). Food & beverage prices rose 0.4% in September (1.2% y/y) while energy goods & services prices fell 2.0% (-8.1% y/y).

Personal consumption expenditures (PCE) increased 0.5% (5.3% y/y) in September, after a 0.3% rise during August. A 0.4% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE increased 0.4% last month (3.1% y/y) after increasing 0.2% during August.

Real spending on durable goods rose 0.4% (3.4% y/y) last month after a 0.2% August decline. Real spending on motor vehicles rose 1.4% (0.2% y/y), after a 2.3% decline. Real outlays on furnishings & durable household equipment declined 0.3% (+4.8% y/y) following a 0.1% uptick while real spending on recreational goods & vehicles rose 0.2% (5.3% y/y) last month, after a 1.3% August jump. Spending on other durable goods eased 0.3% (+5.3% y/y) after strengthening 1.3% in August.

Real spending on nondurable goods surged 0.8% (2.5% y/y) during September, after holding steady in August. Real clothing and footwear purchases edged 0.1% higher (1.5% y/y) last month following a 0.5% decline. Real food & beverage purchases rebounded 0.6% (1.8% y/y) after slipping 0.2%. Real outlays on gasoline & other energy products rose 0.3% (0.7% y/y) last month after declining 1.7% in August. Real spending on other nondurable goods improved 1.3% (4.0% y/y) after a rise of 0.8% in August.

Real spending on services edged up 0.2% (3.2% y/y) in September, following a 0.3% rise in August. Real spending on housing & utilities rose 0.2% (1.1% y/y), after ticking 0.1% higher, while real healthcare spending rose 0.2% (4.9% y/y) following a 0.1% August rise. Real spending on food services & accommodations strengthened 0.8% (1.7% y/y) after a 0.4% rise in August, while real spending on financial services & insurance gained 0.2% (2.8% y/y) last month, after rising 0.5%. Real spending on transportation services fell 0.7% (+4.6% y/y) in September after rising 1.0% in August. Recreation spending fell 0.4% (+2.7% y/y) after rising 0.6% while other services spending gained 0.1% (3.2% y/y) for the second straight month.

Personal income rose 0.3% (5.5% y/y) in September, after rising of 0.2% in August. A 0.4% gain was expected. Wages & salaries rose 0.5% (6.4% y/y) for the second straight month. Rental income rose 0.5% (5.8% y/y) in September, the same as in August. Proprietors’ income weakened 0.4% (+2.2% y/y) following a 0.1% August increase. Income from assets weakened 0.2% (+1.4% y/y), off for the third straight month, and current transfer receipts rose 0.4% (7.6% y/y) in September after rising 0.3% in August. Government social benefits increased 0.4% (7.5% y/y), after a 0.3% rise in August.

Disposable personal income increased 0.3% (5.3% y/y) in September following a 0.2% August increase. After adjusting for price changes, disposable income improved 0.1% (3.1% y/y) for the fourth straight month.

The personal saving rate dipped to 4.6% in September from 4.8% in August. The rate was down from a January high of 5.5%. Personal saving fell 4.7% (+10.3% y/y) in September after falling 1.7% in August.

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.