U.S. PCE Prices & Spending Gains Slow in August

The PCE chain price index rose 0.1% in August following unrevised increases of 0.2% and 0.1% in July and June. The 2.2% y/y rise was the lowest since February 2021 and compares to a 7.2% y/y peak in June 2022. The price index excluding food and energy edged 0.1% higher last month after 0.2% increases in July & June. The y/y rise of 2.7% edged up from 2.6% in both of the prior two months but remained below the 5.6% peak in February and March of 2022. Durable goods prices declined 0.2% (-2.2% y/y), after weakening 0.3% in July. Motor vehicle & prices fell 0.2% (-3.3% y/y), after falling a 0.7% in July. Recreational product prices eased 0.2% (-0.5% y/y), following a 0.1% uptick. Nondurable goods prices slipped 0.1% (-0.2% y/y) in August, off for the third month in the last four, but clothing prices rose 0.5% (0.4% y/y), after three months of decline. Services prices rose 0.2% (3.7% y/y), also for the third month in the last four. Housing & utility prices rose 0.3% (5.0% y/y), after a 0.4% rise and services prices excluding energy & housing increased 0.2% (3.3% y/y) in August, the same as in July. Food prices edged 0.1% higher in August (1.1% y/y) while energy goods & services prices fell 0.8% (-5.0% y/y).

Personal consumption expenditures (PCE) increased 0.2% (5.2% y/y) in August, after a 0.5% rise during July. A 0.3% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE edged 0.1% higher last month (2.9% y/y) after increasing 0.4% during July.

Real spending on durable goods held steady (3.8% y/y) last month after a 1.4% July increase. Real spending on motor vehicles fell 1.8% and was unchanged y/y, after a 4.9% July increase. Real outlays on furnishings & durable household equipment inched 0.1% higher (5.6% y/y) following a rise of 0.6% in July while real spending on recreational goods & vehicles rose strengthened 1.4% (5.9% y/y) last month, after a 0.8% July decline. Spending on other durable goods surged 1.5% (5.8% y/y) after falling 0.3% in July.

Real spending on nondurable goods was also unchanged in August (+2.2% y/y), after a rise of 0.6% in July. Real clothing and footwear purchases weakened 0.6% (+1.7% y/y) last month following a 0.2% rise. Real food & beverage purchases fell 0.5% (+1.2% y/y), reversing July’s 0.5% increase. Real outlays on gasoline & other energy products fell 1.0% (-0.1% y/y) last month after a decline of 2.4% in July. Real spending on other nondurable goods improved 1.0% (3.9% y/y) after a rise of 0.4% (3.1% y/y) in July.

Real spending on services edged up 0.2% (3.0% y/y) in August, following a 0.1% rise in July. Real spending on housing & utilities rose 0.1% (1.1% y/y), the same as during the prior month, while real healthcare spending edged 0.1% higher (4.9% y/y) following a 0.2% July rise. Real spending on food services & accommodations eased 0.1% (+0.9% y/y) after a 0.2% rise in July, while real spending on financial services & insurance gained 0.4% (1.4% y/y) last month, after holding steady in July. Real spending on transportation services increased 0.5% (7.4% y/y) in August after slipping 0.1% in July.

Personal income rose 0.2% (5.6% y/y) in August, after rising of 0.3% in both of the prior two months. A 0.4% gain was expected. Wages & salaries rose 0.5% (6.3% y/y) last month, following a rise of 0.3% in July. Rental income rose 0.7% (6.6% y/y) in August, after a 0.7% rise. Proprietors’ income weakened 0.2% (+3.3% y/y) following a 0.7% July increase. Income from assets weakened 0.5% (+2.4% y/y), after falling 0.5% in July and current transfer receipts rose 0.1% (6.6% y/y) in August after rising 0.4% in July. Government social benefits edged 0.1% higher (6.4% y/y), after a 0.4% advance rise in July.

Disposable personal income increased 0.2% (5.4% y/y) in August, for the third straight month. After adjusting for price changes, disposable income improved 0.1% (3.1% y/y), also for the third straight month.

The personal saving rate dipped to 4.8% in August from 4.9% in July, revised from 2.9%. The rate was down from a January high of 5.5%. Personal saving fell 1.3% (+8.3% y/y) in August after falling 4.9% in July.

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.