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Personal Income: Modest Growth Continues; Core PCE YoY holds at 1.7%

November 30, 2016
Bottom Line: Personal income and disposable income rose modestly in October. Real consumer spending rose slightly in October, increasing by 1.4% annualized, a lower rate than it did the previous quarter, indicating consumers are still spending cautiously. An increase in durable and nondurable good spending was somewhat offset by a decline in spending on services. With the gain in personal income that pushed the savings rate back to 6%, where it spent much of late 2015 and early '16. Finally, consumer inflation with the core PCE index holding firm at 2.7% year-on-year while the headline figure continues to rise modesly but remains below core at 1.4%.

Personal Income ROSE by 0.6% in October , compared with market expectations for an increase of 0.4%. The prior month was revised higher from 0.3% to 0.4%. Personal Income is now 3.9% ABOVE its year ago level.

Wages and Salaries ROSE by 0.5%, Wages are now 4.3% ABOVE year ago levels. Personal Tax Payments ROSE by 0.6% and are now 2.5% ABOVE their year ago level, reflecting the year-on-year changes in employment and income.

Disposable Income ROSE by 0.6% and is now 4.1% ABOVE its year ago level.

Consumer Spending ROSE by 0.3%, compared with market expectations of an increase of 0.4% The prior month was revised higher. There were modest increases in durable goods, modest increases in nondurable goods spending and small decline in services spending. Spending is now 4.2% ABOVE its year ago level.

The Saving Rate ROSE by 0.3 points to 6.0%.

The PCE Price Index ROSE by 0.2% and is now 1.4% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.7% ABOVE its year ago level.

Real Consumer Spending ROSE by 0.1% and is now 2.8% ABOVE its year ago level. The October level is 1.4% annualized above its Q3 level.