Personal Income: Modest Income and Spending Gains

December 23, 2015
Personal Income ROSE by 0.3% in November, compared with market expectations for an increase of 0.2%. Personal Income is now 4.4% ABOVE its year ago level. Wages and Salaries ROSE by 0.5%. Private payrolls increased at a slower pace compared to last month while government wages and salaries increased modestly. Wages are now 4.5% ABOVE year ago levels. Personal Tax Payments ROSE by 0.5% and are now 7.8% ABOVE their year ago level, reflecting the year-on-year rebounds in employment and income. Disposable Income ROSE by 0.3% and is now 3.9% ABOVE its year ago level. Consumer Spending ROSE by 0.3%, in line with market expectations. There were modest increases in durable goods and nondurable goods spending and slight increase in services spending. Spending is now 2.9% ABOVE its year ago level. The Saving Rate FELL by 0.1 points to 5.5%. The PCE Price Index is UNCHANGED and is now just 0.4% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now just 1.3% ABOVE its year ago level. Core consumer inflation has been on a slowing trend since May 2014. Real Consumer Spending ROSE by 0.3% and is now 2.5% ABOVE its year ago level. The October/November average is 1.6% annualized above its Q3 level. Bottom Line: Both personal and disposable income rose modestly in November. Real consumer spending rose 3.0% from Q2 to Q3 -- this quarter (with only October and November available so far) looks to be growing at only 1.6% annualized, indicating consumers are spending cautiously in Q4. Finally, consumer inflation rose slightly while core inflation was little changed on a year-over-year basis.
Article by contingentmacro