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Disposable personal income is flat and real disposable income is negative but consumers are spending more anyway.

That is the message from the BEA's Personal Income and Outlays reports for February and March, both released today.

March

  • Personal income increased $11.4 billion (0.1 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $0.6 billion, (less than 0.1 percent) and personal consumption expenditures (PCE) increased $123.5 billion (0.9 percent).
  • Real DPI decreased 0.2 percent in March, and real PCE increased 0.7 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased less than 0.1 percent.
  • In March, real PCE increased $87.4 billion, which reflected a $66.3 billion increase in spending on goods and an increase of $27.9 billion in spending on services. Within goods, increases were widespread, with spending on motor vehicles and parts the leading contributor. Within services, the largest contributor to the increase was spending on health care.

February

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  • Personal income increased $35.6 billion (0.2 percent) in February. Disposable personal income increased $23.0 billion (0.1 percent), and personal consumption expenditures increased $11.7 billion (0.1 percent).
  • Real DPI increased less than 0.1 percent in February, and real PCE decreased less than 0.1 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.
  • The increase in personal income in February primarily reflected increases in compensation of employees, government social benefits to persons, and personal dividend income that were partially offset by a decrease in personal interest income.
  • In February, real PCE decreased $2.8 billion, which reflected a $23.4 billion decrease in spending on goods. This was partially offset by an increase of $16.4 billion in spending on services (table 7). Within goods, food and beverages purchased for off-premises consumption was the leading contributor to the decrease. Within services, the largest contributor to the increase was spending on household electricity and gas.

Synopsis

Make less, spend more.

This data, released today, was supposedly already factored into the GDP report for the first quarter.

These reports strongly suggest the government slowdown had a far bigger impact than expected.

Mike "Mish" Shedlock