Updated: 01-Mar-10 08:49 ET
| January Personal Income and Spending |
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| Updated: 01-Mar-10 08:49 ET |
Highlights
- Personal spending in January rose 0.5% after increasing 0.3% in December. The increase matched January’s retail sales numbers and exceeded the consensus estimate by 0.1 percentage points.
- Personal income rose 0.1%, well below the 0.4% increase the consensus expected. Real disposable income fell 0.6%.
- Inflation remained subdued as core prices were unchanged. However, higher energy costs pushed total consumer prices up 0.2%.
Key Factors
- The spending data came in largely as expected. Goods expenditures rose 1.2% as nondurable consumption jumped 1.8%. Services consumption increased a modest 0.2%.
- Personal taxes rose by $59.0 bln as federal net nonwithheld taxes rose by $52.5 bln. The jump in taxes should not carry over into February and growth in disposable income should look strong in response.
Big Picture
- While off their lows, sustainability in the personal income and consumption sector look weak. High unemployment will put heavy downward pressures on wage growth. Since consumption has a direct relationship with the amount of income a consumer has to spend, lower incomes will cause consumption growth to be weak. Government stimulus in the form of tax credits has done a nice job of maintaining minimal growth and if they expire we could see another leg down in consumption spending.
| Category | JAN | DEC | NOV | OCT | SEP |
| Personal Income | |||||
| Total Income | 0.1% | 0.3% | 0.4% | 0.3% | 0.1% |
| Wage and Salary | 0.4% | 0.1% | 0.2% | 0.2% | 0.0% |
| Disposable Income | -0.4% | 0.4% | 0.5% | 0.4% | 0.2% |
| Savings Rate | 3.3% | 4.2% | 4.1% | 4.1% | 4.2% |
| Personal Consumption | |||||
| Total (Nominal) | 0.5% | 0.3% | 0.5% | 0.5% | -0.6% |
| Total (Real, Chain $) | 0.3% | 0.1% | 0.4% | 0.3% | -0.7% |
| Core PCE Deflator | |||||
| Month/Month | 0.0% | 0.1% | 0.1% | 0.2% | 0.1% |
| Year/Year | 1.4% | 1.5% | 1.5% | 1.4% | 1.2% |