U.S. Personal Spending Strengthens in January

Personal consumption expenditures (PCE) increased 1.8% (7.9% y/y) during January after easing 0.1% in December, revised from -0.2%. Spending fell 0.2% in November. A 1.3% rise had been expected in the Action Economics Forecast Survey.

In January, real PCE increased 1.1% (2.4% y/y) after falling 0.3% in both of the prior two months. Real spending on durable goods increased 5.2% (0.5% y/y) last month after a 1.7% decline. Spending on motor vehicle & parts surged 11.9% (-1.7% y/y) after falling 3.3% in December. Real spending on furniture & appliances gained 2.0% (0.6% y/y) last month after falling 1.1% December. Real spending on recreational goods & vehicles improved 2.1% (2.8% y/y) following a 0.2% easing.

Real spending on nondurable goods rose 0.5% (-1.4% y/y) in January after declining in each of the prior three months. Real apparel spending increased 3.0% (3.5% y/y) last month after weakening 1.6%. Outlays on gasoline & other energy products declined 2.2% (-0.9% y/y) following a 0.3% fall and real food & beverage outlays eased 0.1% (-5.7% y/y) after falling 0.5% in December.

Real spending on consumer services improved 0.6% last month (4.1% y/y) after holding steady in December. Recreation services buying strengthened 1.4% (7.9% y/y) in January, double the prior month’s gain while real restaurant and hotel spending surged 4.6% (14.0% y/y), after falling 0.7% in December. Real transportation services outlays rose 0.9% (4.1% y/y) after rising 0.4% in December, while real housing & utilities expenditures fell 0.6% (-0.2% y/y) after a 0.1% uptick. Real healthcare spending gained 0.4% last month (4.0% y/y) after rising 0.6%. Financial services & insurance expenditures improved 0.3% (2.9% yy) in January after easing 0.1% in December.

Personal income rose 0.6% (6.4% y/y) during January, half the expected 1.2% rise, after increasing 0.3% in December, revised from 0.2%. The gain reflected a 0.9% increase (7.9% y/y) in wages & salaries after two consecutive 0.4% gains. Proprietors' income rose 0.4% (6.6% y/y), the same as in December. Rental income strengthened 1.5% (12.1% y/y) in January following a 1.0% December rise. Receipts on assets rose 0.5% (5.3% y/y) as interest income edged 0.1% higher (8.3% y/y), but dividend income increased 0.9% (2.1% y/y). Personal transfer receipts eased slightly (+3.5% y/y) after a 0.1% uptick.

Disposable income rose 2.0% (8.4% y/y) in January following a 0.4% December rise. Taxes fell 7.9% (-5.1% y/y). Real disposable earnings rose 1.4% (2.8% y/y) after a 0.2% December rise.

The personal saving rate rose to 4.7% in January, the highest level in twelve months. The level of personal savings increased 7.1% last month and increased 8.7% y/y.

The PCE chain price index increased 0.6% (5.4% y/y) following a 0.2% December rise, revised from 0.1%. The index excluding food & energy also rose 0.6% (4.7% y/y), the largest increase since August as it followed a 0.4% December rise. Goods prices rose 0.6% (4.7% y/y) while services prices also gained 0.6% (5.7% y/y). The core services price index excluding energy & housing increased 0.6% (4.6% y/y), the same as in December. Energy prices rose 2.0% (9.6% y/y) after falling 3.6% in December while food prices rose 0.4% (11.1% y/y), the same as 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.