U.S. Personal Spending Slips in December

Personal consumption expenditures (PCE) fell 0.2% (+7.4% y/y) during December after easing 0.1% in November, revised from +0.1%. The decline matched expectations in the Action Economics Forecast Survey.

In December, real PCE declined 0.3% (+2.2% y/y) after falling 0.2% in November. Real spending on durable goods declined 1.6% (+1.8% y/y) last month as spending on motor vehicle & parts decreased 2.3% (-1.4% y/y) after falling 5.2% in November. Real spending of furniture & appliances decreased 1.4% (+2.0% y/y) last month after a 1.3% November slip. Real spending on recreational goods & vehicles weakened 0.5% (5.9% y/y) following a 0.7% drop.

Real spending on nondurable goods weakened 0.4% (-0.8% y/y) in December, after falling 0.2% in November. Outlays on gasoline & other energy products rose 1.6% (-3.8% y/y) following a 1.6% decline. Real apparel spending declined 1.7% (+3.2% y/y) last month after a 0.9% weakening and real food & beverage outlays eased 0.1% (-4.6% y/y), the same as in November.

Real spending on consumer services eased slightly last month (+3.3% y/y) after 0.2% increases in each of the prior three months. Real transportation services outlays rose 0.6% (2.1% y/y) after falling 1.0% in the prior month, while real housing & utilities expenditures rose 0.2% (1.8% y/y) after two months of 0.3% increase. Real healthcare spending gained 0.4% last month (2.3% y/y) after two months of 0.3% gain. Recreation services buying strengthened 0.4% (4.3% y/y) in December, double the prior month’s gain while real restaurant and hotel spending fell 1.0% (5.1% y/y) last month after a 0.5% fall in November. Real spending on financial services and insurance weakened 0.6% (+0.9% y/y) last month after rising 0.7% in November.

Personal income rose 0.2% (4.6% y/y) during December, as expected, after increasing 0.3% in November, revised from 0.4%. The gain reflected a 0.3% rise (5.3% y/y) in wages & salaries which was the same as in November. Proprietors' income also rose 0.3% (5.9% y/y) after easing during both of the prior two months. Rental income strengthened 0.8% (10.2% y/y) in December. Receipts on assets rose 0.1% (4.6% y/y) as interest income increased 1.0% (8.5% y/y) but dividend income fell 0.9% (0.5% y/y). Personal transfer receipts held steady (+1.8% y/y). Disposable income rose 0.3% (3.2% y/y) in December, the same as in November, while real disposable earnings rose 0.2% (-1.7% y/y) for a second straight month.

The personal saving rate rose to 3.4% in December, the highest level in seven months. The level of personal savings increased 16.1% last month but remained 53.5% lower y/y.

The PCE chain price index edged 0.1% higher (5.0% y/y) last month, the same as in November. The index excluding food & energy rose 0.3% (4.4% y/y) after a 0.2% November gain. Energy prices weakened 5.1% (+6.9% y/y) after falling 1.5% in November while food prices rose 0.2% (11.2% y/y) after a 0.3% gain.

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.