US Personal Spending Posts Biggest Fall in Over 9 Years


Personal spending in the United States fell 0.5 percent from a month earlier in December 2018, following a downwardly revised 0.6 percent increase in November and compared to market expectations of a 0.2 percent drop. It was the largest decline in personal spending since September 2009.

The BEA latest report, which has been postponed for almost a month due to the partial government shutdown, includes personal income and outlays for December 2018, as well as personal income for January 2019. Estimates for personal outlays and the personal saving rate for January are not available, according to the source.

Personal Income and Outlays, December 2018

Personal consumption expenditures (PCE) fell by $76.6 billion, or 0.5 percent, in December, following a revised $79.7 billion advance, or 0.6 percent, in November. The decline in consumer spending, which accounts for more than two-thirds of US GDP, was due to a decrease in consumption of durable (-1.9 percent vs 2.1 percent in November) and nondurable goods (-1.9 percent vs 0.4 percent). Meanwhile, spending for services edged up 0.1 percent, easing from a 0.4 percent gain in the previous month.

Real PCE decreased $77.9 billion, or 0.6 percent, which reflected a decrease of $67.2 billion in spending for goods and a $18.2 billion decrease in spending for services. Within goods, recreational goods and vehicles was the leading contributor to the decrease. Within services, the largest contributor to the decrease was spending for household electricity and gas.

Personal income increased $179.0 billion, or 1 percent, in December, due to increases in personal dividend income, compensation of employees, and farm proprietors’ income. Personal dividend income increased $83.4 billion, primarily reflecting a one-time special dividend payment by VMware Incorporated. Farm proprietors’ income increased $29.2 billion, which included subsidy payments associated with the Department of Agriculture’s Market Facilitation Program.

Personal outlays decreased $71.3 billion in December. Personal saving rose to $1.21 trillion in December and the personal saving rate, personal saving as a percentage of disposable personal income, was 7.6 percent.

Disposable personal income increased $173.1 billion, or 1.1 percent, and real DPI increased 1.0 percent in December. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

Personal Income, January 2019

Personal income dropped $23.8 billion, 0.1 percent, in January. It was the first month of decline in personal income since November 2015 due to decreases in personal dividend income, farm proprietors’ income, and personal interest income that were partially offset by increases in social security benefit payments (related to cost of living adjustments), and other government social benefits to persons, which includes the Child Tax Credit and the Affordable Care Act refundable tax credit.

2018 Personal Income and Outlays

In 2018, PCE increased 4.7 percent, faster than 4.3 percent in 2017. Personal income advanced 4.5 percent (vs 4.4 percent in 2017) and DPI rose 5.0 percent (vs 4.4 percent in 2017). Also, real DPI increased 2.9 percent (vs 2.6 percent in 2017) and real PCE went up 2.6 percent (vs 2.5 percent in 2017).

US Personal Spending Posts Biggest Fall in Over 9 Years


BEA | Joana Ferreira | joana.ferreira@tradingeconomics.com
3/1/2019 2:20:25 PM