EmailEconomic
Last Update: 31-May-13 09:34 ET
Personal Income and Spending
Highlights
- The Personal Income and Spending report for April was disappointing. It showed that income was flat and that spending declined 0.2%. The Briefing.com consensus expected both measures to be up 0.1%.
- Core PCE was also flat compared to a 0.1% increase in March.
- Personal income for March was revised up to 0.3% from 0.2% while spending was revised down to 0.1% from 0.2%.
Key Factors
- Real PCE, which is the component that factors into GDP estimates, rose 0.1% versus a 0.2% increase in March. This is a core reason why Q2 GDP is generally expected to trail the 2.4% growth rate seen in the first quarter.
- A 0.6% decline in proprietors' income and a 0.6% decline in personal current transfer receipts were notable drags in April, yet the big component of wage and salary disbursements was effectively flat with private industries and government showing negligible growth.
- Goods spending was up 0.3%, led by a 0.7% increase in spending on durable goods
- Services spending fell 0.1% and proved to be the difference that dragged down the personal spending number.
- The personal savings rate held steady at 2.5%.
Big Picture
- Something that is sure to grab the Fed's attention, other than the soft level of spending and flat income growth, is that the PCE price index is up just 0.7% year-over-year, which is well below the 2.0% target.
| Category | APR | MAR | FEB | JAN | DEC |
|---|---|---|---|---|---|
| Personal Income | |||||
| Total Income | 0.0% | 0.3% | 1.2% | -4.4% | 2.6% |
| Wage and Salary | 0.0% | 0.2% | 0.7% | -2.4% | 0.7% |
| Disposable Income | -0.1% | 0.2% | 1.2% | -5.1% | 2.7% |
| Savings Rate | 2.5% | 2.5% | 2.4% | 2.1% | 6.5% |
| Personal Consumption | |||||
| Total (Nominal) | -0.2% | 0.1% | 0.8% | 0.3% | 0.2% |
| Total (Real, Chain $) | 0.1% | 0.2% | 0.4% | 0.2% | 0.2% |
| Core PCE Deflator | |||||
| Month/Month | 0.0% | 0.1% | 0.1% | 0.2% | 0.0% |
| Year/Year | 1.1% | 1.2% | 1.3% | 1.4% | 1.4% |
