Consumer Spending +0.2% Prices +0.4%: Real Spending Declined 0.1%

The BEA’s Personal Income and Outlays report for January shows a boost bigger boost in income and prices than spending.

Key Points

• Personal income increased $64.7 billion (0.4 percent) in January according to estimates released today by the Bureau of Economic Analysis.
• Disposable personal income (DPI) increased $134.8 billion (0.9 percent) and personal consumption expenditures (PCE) increased $31.2 billion (0.2 percent).
• Real DPI increased 0.6 percent in January
• Real PCE decreased 0.1 percent.
• The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.
• Personal saving was $464.4 billion in January and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.2 percent, up from 2.5% in December.

2017 Year Totals

• Real DPI increased 1.2 percent in 2017, compared with an increase of 1.4 percent in 2016.
• Real PCE increased 2.7 percent, the same increase as in 2016.

Income Up, Spending Down

Income up and spending down is a good thing. It will boost the savings rate but it’s negative for GDP. Note that spending rose far more incomes in 2017.

A revision took December real PCE from 0.3% to 0.2%. This is a small net subtraction to fourth-quarter GDP.

Today’s report will subtract from first-quarter GDP.

Mike “Mish” Shedlock