U.S. Personal Spending & Income Rise in December

Personal consumption expenditures (PCE) increased 0.7% (5.9% y/y) during December after increasing 0.4% in November, revised from 0.2%. A 0.4% increase had been expected in the Action Economics Forecast Survey. Adjusted for price changes, PCE rose 0.5% last month (3.2% y/y) after a 0.5% November gain, revised from 0.3%.

Real spending on durable goods surged 1.5% last month (8.5% y/y) following a 1.1% November increase. Spending on motor vehicles improved 1.6% (7.0% y/y) after declines in three of the prior four months. Real home furnishings & appliance outlays gained 0.6% (4.7% y/y) after rising 2.2% in November while spending on recreational goods & vehicles surged 2.8% (14.5% y/y). Real spending on nondurables rose 0.9% (3.1% y/y) following a 0.3% November rise. The rebound was led by a second consecutive 1.7% (3.2% y/y) monthly gain in spending on clothing and footwear. Real food & beverage purchases rose 0.4% (1.3% y/y) after a 0.5% November gain while real spending on gasoline & other energy goods rebounded 2.1% (4.0% y/y) in December after a like decline in November.

Real spending on services increased 0.3% (2.3% y/y) in December after rising 0.4% in November. Spending on food services & accommodations eased 0.3% (+5.1% y/y) after surging 1.0% in November while spending on financial services rose 0.8% last month (1.7% y/y) after increasing 0.9% in November. Spending on housing & utilities eased 0.2% (+0.4% y/y) after easing 0.1% in the prior month. Healthcare spending rose 0.4% (4.3% y/y) after a 0.2% gain while spending on transportation services surged 1.5% (4.3% y/y) after falling 0.6% in November.

Personal income rose 0.3% (4.7% y/y) in December following a 0.4% gain in November. A 0.3% increase had been expected. A 0.4% rise (6.8% y/y) in wages & salaries came after a 0.5% November increase. Rental income rose 0.2% (8.0% y/y) while proprietors’ income was little changed (+3.1% y/y) after rising 0.4% in November. Income from assets increased 0.3% (4.2% y/y) and current transfer receipts also were little changed (-0.4% y/y) as government social benefits rose 0.1% (-0.6% y/y).

Disposable income increased 0.3% (6.9% y/y) in December following a 0.4% rise. After adjusting for inflation, real disposable income improved 0.1% (4.2% y/y) last month after increasing 0.5% in November.

The personal saving rate fell to 3.7% last month from 4.1% in each of the prior two months, reflecting a 9.8% fall (+17.6% y/y) in personal saving.

The PCE price index rose 0.2% (2.6% y/y) in December after easing 0.1% in November. The index excluding food and energy prices increased 0.2% (2.9% y/y) following two straight 0.1% gains. Goods prices fell 0.2% last month (unchanged y/y), the third straight month of decline. Services prices rose 0.3% (3.9% y/y), the same as in November. Food prices rose 0.1% (1.5% y/y) after easing 0.1% in November, while energy prices improved 0.3% (-2.2% y/y) after falling 2.7% in both of the prior two months.

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.