U.S. Personal Spending Increases Modestly in January as Income Strengthens
by:Tom Moeller
|in:Economy in Brief
Summary
- Nominal spending improves but eases in real terms.
- Disposable income moves up steadily.
- PCE price index strengthens.
Personal consumption expenditures (PCE) increased 0.2% (4.5% y/y) during January after increasing an unrevised 0.7% in December. A 0.2% increase had been expected in the Action Economics Forecast Survey. Adjusted for price changes, PCE eased 0.1% last month (+2.1% y/y) after a 0.6% December gain.
Real spending on durable goods fell 2.1% last month (+0.7% y/y) following a 1.5% December increase. Spending on motor vehicles fell 3.7% (-6.1% y/y) after a 1.4% rise. Real home furnishings & appliance outlays weakened 1.4% (-0.4% y/y) after rising 0.8% in December while spending on recreational goods & vehicles declined 2.0% (+8.3% y/y) after rising 2.4%. Real spending on nondurables fell 0.5% last month (+2.0% y/y) following a 0.6% December rise. Real clothing and footwear purchases rose 0.7% (0.8% y/y) following a 1.4% rise. Real spending on services increased 0.4% (2.3% y/y) for the third straight month. Spending on food services & accommodations improved 0.2% (2.3% y/y) after holding steady in December while spending on financial services rose 0.7% last month (2.7% y/y) after increasing 1.2% in December. Spending on housing & utilities rose 0.6% (2.0% y/y) after easing 0.1% in the prior month. Healthcare spending rose 0.3% (4.3% y/y) after a 0.5% gain while spending on transportation services improved 0.3% (2.4% y/y) in January after surging 1.3% in December.
Personal income rose 1.0% (4.8% y/y) in January following a 0.3% December gain. A 0.3% increase had been expected. A 0.4% rise (5.7% y/y) in wages & salaries came after a 0.5% December increase. Rental income jumped 1.6% (8.2% y/y) following a 0.3% increase but proprietors’ income eased 0.2% (+2.7% y/y) after rising 0.4% in December. Income from assets increased 2.1% (5.63% y/y) after a 0.3% rise and current transfer receipts surged 2.6% (2.3% y/y) after edging 0.1% lower. Government social benefits strengthened 2.3% (1.9% y/y) after rising 0.2% in December.
Disposable income increased 0.3% (4.5% y/y) in January, the same as in December. After adjusting for price inflation, disposable income held steady (+2.1% y/y) last month after increasing 0.2% in December.
The personal saving rate edged up to 3.8% last month from 3.7% in December, reflecting a 1.7% increase (-10.5% y/y) in personal saving.
The PCE price index rose 0.3% (2.4% y/y) last month after increasing 0.1% in December, revised from 0.2%. The index excluding food and energy prices strengthened 0.4% last month (2.8% y/y) after December’s 0.1% increase, revised from 0.2%, and November’s 0.1% gain. Goods prices fell 0.2% last month (-0.5% y/y), the fourth straight month of decline. Services prices rose 0.6% (3.9% y/y) following two months of 0.3% increase. Services prices excluding energy & healthcare increased 0.7% (4.5% y/y) after two months of 0.3% gain. Food prices rose 0.5% (1.4% y/y) after holding steady in December, while energy prices declined 1.4% (-4.9% y/y) after falling 0.3% in December.
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.
Reflections on the Economy and Bank Regulation from Fed Governor Michelle W. Bowman can be found here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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