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

Personal income rose 0.4% in January, but consumers only spent half of the boost.

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.

as if 0.2% spending was disappointing enough… looks what they’re spending their money on…NOT bullish for growth (or eps) pic.twitter.com/hFM56CBQn0

— steph pomboy (@spomboy) March 1, 2018

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.