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Personal Income: Income and Spending Growth Mostly Steady As Core PCE Hits 1.5%

December 22, 2017
Bottom Line: Personal income rose steadily as disposable income increased in November. Real consumer spending rose 2.1% from Q2 to Q3 -- this quarter (with only October and November available so far) looks to be growing at 2.5% annualized, indicating consumption picked up amid early holiday shopping in the first two months of the 4th Quarter. Core PCE, the Fed's preferred inflation metric, stayed below target, up 0.08%, 1.8% annualized in the last 3 months and 1.5% over the last 12 months.

Personal Income ROSE by 0.3% in November, compared with market expectations for an increase of 0.4%. The prior month was revised lower from 0.39% to 0.36%. Personal Income is now 3.8% 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 0.2% and are now 4.5% ABOVE their year ago level, reflecting the year-on-year changes in employment and income.

Disposable Income ROSE by 0.4% and is now 3.7% ABOVE its year ago level.

Consumer Spending ROSE by 0.6%, compared with market expectations of an increase of 0.3% The prior month was revised lower.There were no changes in durable goods, modest increases in nondurable goods spending and modest increases in services spending. Spending is now 4.5% ABOVE its year ago level.

The Saving Rate FELL by 0.30 points to 2.9%.

The PCE Price Index ROSE by 0.2% and is now 1.8% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.1% and is now 1.5% ABOVE its year ago level.

Real Consumer Spending ROSE by 0.4% and is now 2.7% ABOVE its year ago level. The October/November average is 2.5% annualized above its Q3 level.