Personal Income: Steady Gains For Disposable Income Continue

Bottom Line: Personal income rose as expected in February as the new withholding schedule under the Tax Cuts and Jobs Act continued to get rolled out. Real consumer spending was steady in February, starting the quarter at a a lower rate (0.4% annualized in Jan and Feb) than it did the previous quarter, indicating consumers have not yet started to spend the tax cut. Personal Income ROSE by 0.4% in January, compared with market expectations for an increase of 0.3%. The prior month was revised higher from 0.35% to 0.38%. Personal Income is now 3.8% ABOVE its year ago level. Wages and Salaries ROSE by 0.5%, Wages are now 4.6% ABOVE year ago levels. Personal Tax Payments FELL by 3.3% and are now 2.4% ABOVE their year ago level, reflecting the year-on-year changes in employment and income. Disposable Income ROSE by 0.9% and is now 4.0% ABOVE its year ago level. Consumer Spending ROSE by 0.2%, compared with market expectations of an increase of 0.2% The prior month was revised lower. There were large decline in durable goods, modest increases in nondurable goods spending and small increases in services spending. Spending is now 4.4% ABOVE its year ago level. The Saving Rate ROSE by 0.70 points to 3.2%. The PCE Price Index ROSE by 0.4% and is now 1.7% ABOVE its year ago level. Meanwhile, the Core PCE Index ROSE by 0.3% and is now 1.5% ABOVE its year ago level. Real Consumer Spending FELL by -0.1% and is now 2.7% ABOVE its year ago level. The January level is 0.7% annualized above its Q4 level.