Haver Analytics
Haver Analytics
USA
| Apr 26 2024

U.S. Personal Spending Remains Firm; Core Price Rise Steadies in March

Summary
  • Spending growth holds at strongest rate since June.
  • Disposable income increase picks up.
  • Core PCE price index gain stabilizes at lessened rate.

Consumer spending remains firm. Personal consumption expenditures (PCE) increased 0.8% (5.8% y/y) during March after rising an unrevised 0.8% in February. A 0.6% increase had been expected in the Action Economics Forecast Survey. Adjusted for price changes, PCE rose 0.5% last month (3.1% y/y), also steady with February.

Real spending on durable goods increased 0.9% in March (4.3% y/y) after rising 1.4% in February. Real spending on motor vehicles improved 0.8% (-2.9% y/y) after rising 2.8%. Real home furnishings & appliance outlays increased 0.8% (5.6% y/y) after rising 0.6% in February while real spending on recreational goods & vehicles jumped 1.2% (9.8% y/y) after edging 0.1% higher in February. Spending on other durable goods rose 0.7% (9.9% y/y) after a 2.2% jump.

Real spending on nondurable goods jumped 1.3% last month (3.0% y/y), after falling in each of the prior two months. Real clothing and footwear purchases were off 0.6% (+3.0% y/y) following a 0.8% decline. Real food & beverage buying surged 1.1% (2.4% y/y) after rising 0.2%. Real outlays on gasoline & other energy products rose 4.3% (-0.3% y/y) after falling sharply in three of the prior four months. Spending on other nondurable goods increased 1.2% (4.7% y/y) following a 0.3% rise.

Real spending on services increased 0.2% (2.8% y/y) in March following a 0.6% February gain. Real spending on housing & utilities held steady (0.6% y/y) after easing 0.1% in the prior month while real healthcare spending rose 0.6% (4.5% y/y) after a 0.5% rise. Real spending on food services & accommodations improved 0.3% (4.0% y/y) after gaining 0.6% in February while real spending on financial services & insurance rose 0.4% last month (3.5% y/y), about the same as in February. Real spending on transportation services fell 0.7% (+4.2% y/y) after rising 1.9% in February.

Personal income rose 0.5% (4.7% y/y) in March after increasing an unrevised 0.3% in February. A 0.5% increase had been expected. Wages & salaries rose 0.7% (5.9% y/y) for the second consecutive month. Rental income jumped 1.6% (8.4% y/y), about as it did in February and proprietors’ income rose 0.3% (4.3% y/y) after a 0.4% gain. Income from assets improved 0.1% (2.3% y/y) after a 2.0% decline and current transfer receipts rose 0.3% (3.1% y/y) after rising 0.6% in February. Government social benefits rose 0.3% (3.0% y/y) after strengthening in each of the prior two months.

Disposable personal income increased 0.5% (4.1% y/y) in March following a 0.2% February rise. After adjusting for price changes, disposable income improved 0.2% (1.4% y/y) last month after easing 0.1% in February and holding steady in January.

As spending growth again outpaced the gain in disposable income, the personal saving rate fell to 3.2% from an unrevised 3.6% in February. The rate was down from a May 2023 high of 5.3% and the lowest since October 2022. Personal saving declined 9.2% (-35.9% y/y) after falling 13.7% in February.

The PCE chain price index rose 0.3% (2.7% y/y) in March, the same as it did in February but down from 0.4% in January. These increases were up from minimal monthly change during the fourth quarter of last year. The price index excluding food and energy rose 0.3% (2.8% y/y), the same as it did in February, but these were below a 0.5% January rise. Goods prices rose 0.1% last month (0.1% y/y) following a 0.5% rise. Services prices rose 0.4% (4.0% y/y) following a 0.3% increase. Services prices excluding energy & healthcare increased 0.5% (4.4% y/y) after rising 0.3% in February. Food prices eased slightly (+1.5% y/y) last month after rising 0.1% in February. Energy goods & services prices rose 1.2% (2.6% y/y) following a 2.3% 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.

  • 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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