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Personal Income: Solid Gains to Start Year

March 1, 2017
Bottom Line: Personal income and disposable income rose modestly in January. Real consumer spending slowed slightly in January, increasing by 0.1% annualized, a lower rate than in the previous quarter, indicating consumers started 1Q17 spending cautiously, despite strong consumer confidence surveys. Core PCE, the Fed's preferred inflation metric, rose in January 0.3% and is 1.7% above its year ago levels.

Personal Income ROSE by 0.4% in January, compared with market expectations for an increase of 0.3%. The prior month was revised a touch lower. Personal Income is now 4.0% ABOVE its year ago level.

Wages and Salaries ROSE by 0.4%, Wages are now 4.5% ABOVE year ago levels. Personal Tax Payments ROSE by 1.1% and are now 4.5% ABOVE their year ago level, reflecting the year-on-year changes in employment and income.

Disposable Income ROSE by 0.3% and is now 4.0% ABOVE its year ago level.

Consumer Spending ROSE by 0.2%, compared with market expectations of an increase of 0.3% The prior month was revised higher. There were small decline in durable goods, modest increases in nondurable goods spending and no changes in services spending. Spending is now 4.7% ABOVE its year ago level.

The Saving Rate ROSE by 0.1 points to 5.5%.

The PCE Price Index ROSE by 0.4% and is now 1.9% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.3% and is now 1.7% ABOVE its year ago level.

Real Consumer Spending FELL by -0.3% and is now 2.8% ABOVE its year ago level. The January level is 0.1% annualized above its Q4 level.